Final Examination Booklet Financial Accounting 1
Final Examination Bookletfinancial Accounting1financial Accountingcomp
Complete the following exam by answering the questions and compiling your answers into a word-processing document. When you’re ready to submit your answers, refer to the instructions at the end of your exam booklet. Be certain to indicate the proper question number before each of your answers. Remember to show your work if an answer requires a mathematical solution.
Part A: Answer each of the following questions. Each answer is worth 20 points.
Question 1: Cash Flow from Operating Activities (Lauren Company)
Using the income statement and balance sheet data provided for Lauren Company, complete the cash flow from operating activities section using the direct method for the year ended December 31, 2010.
Question 2: Horizontal Analysis
Given the balance sheet data for Jill’s Bikes, perform a horizontal analysis by calculating the percentage change for each asset and liability item from 2010 to 2011. Round to the nearest tenth of a percent.
Question 3: Recording Transactions using the Accounting Equation
Record the provided transactions using the accounting equation: Assets = Liabilities + Equity. Example: Cash increases and accounts payable increases.
Question 4: Journalize Transactions
Journalize the specified transactions for ABC Corporation and other scenarios, omitting explanations.
Question 5: Prepare a Trial Balance
Prepare a trial balance for "Learn a New Language, Inc." based on the given account balances as of December 31, 2012.
Question 6: Calculate Missing Information from a Trial Balance
Given the post-closing trial balance, compute any missing figures such as totals or balances.
Question 7: Inventory Cost using LIFO
Calculate the cost of goods sold for Rick Company for 2012 employing the LIFO method, given beginning inventory and purchases.
Question 8: Inventory Error Effect
Indicate whether each item is understated, overstated, or correctly stated in Years 1 and 2, given an overstated ending inventory in Year 1.
Question 9: GAAP vs IFRS Treatments
Identify whether each treatment is GAAP-based or IFRS-based for various accounting topics, such as cash flow statement classifications and inventory methods.
Question 10: Bank Reconciliation Entries
Record journal entries based on the bank reconciliation information provided for July 31, 2011.
Question 11: Journalize Sales and Notes
Record transactions involving sales on account, notes receivable, accrued interest, and payment of the note for Tammy Company.
Question 12: Depreciation Calculations
Compute depreciation expenses for a truck over two years using straight-line, double-declining balance, and units-of-production methods.
Question 13: Journalize Land Purchase and Sale
Record the purchase of land with a building, depreciation, and the sale transaction for the land and building.
Question 14: Treasury Stock Transactions
Journalize reacquisition and sale of treasury stock at specified prices and shares.
Question 15: Statement of Cash Flows
Prepare a statement of cash flows for Lowry Landscapes for 2010 using the indirect method, considering net income, asset sales, and depreciation.
Submitting Your Assignment
Save your completed exam file, ensuring student and exam numbers are included. Log into the designated platform, navigate to the course, and follow submission instructions—attaching your file(s) and confirming submission. Keep a backup of your work.
Paper For Above instruction
Answer for Question 1: Cash Flow from Operating Activities for Lauren Company
The cash flow from operating activities using the direct method begins with cash collections from customers and subtracts cash payments for expenses. To compute this, we adjust the net income for changes in working capital and non-cash expenses.
Given data indicates sales, interest, and dividend revenues, along with expenses like taxes, salaries, COGS, and interest. Accounts receivable decreased from $58,600 in 2009 to $53,400 in 2010, indicating cash collected from customers exceeding sales revenue by the change in receivables. Accounts payable increased, reflecting more cash paid for expenses than what was expensed. Inventory change indicates cash paid for inventory purchases.
Calculations:...
Answer for Question 2: Horizontal Analysis of Jill’s Bikes
The horizontal analysis compares each year's amount to the previous year, calculating percentage change as ((amount in 2011 - amount in 2010) / amount in 2010) 100%. For example, cash and equivalents changed from $94,000 to $72,000, which results in a percentage decrease of ((72 - 94)/94)100 ≈ -23.4%. Repeat similarly for all items to complete analysis.
Answer for Question 3: Accounting Equation Transactions
A. Assets increase (cash), and equity increases (owner capital) with an investment of $17,000.
B. Assets (office equipment and supplies) increase; liabilities (accounts payable) increase; assets decrease cash.
C. Supplies increase; liabilities (accounts payable) increase. Sales and cash or accounts receivable increase correspondingly.
Answer for Question 4: Journal Entries
April 8: Debit Office Furniture $15,000; Credit Cash $7,000; Credit Accounts Payable $8,000.
April 19: Debit Prepaid Lease $60,000; Credit Cash $60,000.
Answer for Question 5: Trial Balance Preparation
List all balances and ensure total debits equal total credits, calculating missing figures as needed.
Answer for Question 6: Missing Info from Trial Balance
Calculate totals and verify the balances, ensuring organized classification of accounts.
Answer for Question 7: Cost of Goods Sold Using LIFO
Using the perpetual system, determine the latest inventory purchases and calculate COGS accordingly.
Answer for Question 8: Inventory Error Effects
Overstating ending inventory understates COGS and vice versa. Document the impact accordingly for Years 1 and 2.
Answer for Question 9: GAAP vs IFRS
A. GAAP, B. GAAP, C. IFRS.
Answer for Question 10: Bank Reconciliation Journal Entries
Debit/Credit entries for items like bank collection, service charges, and adjustments based on reconciliation data.
Answer for Question 11: Sales and Note Entries
Debit Accounts Receivable $3,500; Credit Sales $3,500. Record note receivable, accrued interest, and payment with appropriate debits and credits.
Answer for Question 12: Depreciation Calculations
Straight-line: Annual depreciation = (Cost - Residual) / Useful life.
Double-declining balance: Use declining balance rate.
Units-of-production: (Cost - Residual) / Total units = depreciation per mile.
Answer for Question 13: Land Purchase and Sale Journals
Purchase entry for land and building, then depreciation, and finally sale recording at proceeds of $825,000.
Answer for Question 14: Treasury Stock Journals
June 3: Debit Treasury Stock $3,500; Credit Cash $3,500. June 7 & 8: record sale of treasury shares at specified prices.
Answer for Question 15: Cash Flows Statement (Indirect Method)
Start with net income, adjust for depreciation, gains, and changes in working capital components including land sale proceeds.
References
- Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice. Cengage Learning.
- Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2018). Financial Accounting. Wiley.
- Healy, P., & Palepu, K. (2017). Business Analysis and Valuation Using Financial Statements. Cengage Learning.
- Accounting Standards Codification (ASC). Financial Accounting Standards Board (FASB).
- International Financial Reporting Standards (IFRS). IFRS Foundation.
- Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial Accounting Theory and Analysis. Wiley.
- Gibson, C. H. (2019). Financial Reporting & Analysis. Cengage.
- Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2019). Financial Statement Analysis. McGraw-Hill Education.
- Stickney, C. P., Brown, P., & Wahlen, J. M. (2018). Financial Accounting: An Introduction to Concepts, Methods and Uses. Cengage Learning.
- Bank of America. (2011). Bank Reconciliation Procedures. [Online resource]