KU ACCT 200 - Exam II Review Key (15 pages)

Previewing pages 1, 2, 3, 4, 5 of 15 page document View the full content.
View Full Document

Exam II Review Key



Previewing pages 1, 2, 3, 4, 5 of actual document.

View the full content.
View Full Document
View Full Document

Exam II Review Key

68 views

Exam Review


Pages:
15
School:
University of Kansas
Course:
Acct 200 - Financial I
Financial I Documents
Unformatted text preview:

EXAM 2 REVIEW KEY Miscellaneous Questions 1 How do you compute gross margin Sales COGS GM 2 What type of account is COGS Expense Account 3 Explain COGS Cost of goods sold represents the price that you paid for the goods that you sold It is an expense account and will be closed to income summary 1 Bank Reconciliation Books Beginning Balance Add Interest Collected by Bank Subtract Service Charge NSF check Bank Beginning Balance Add Deposit in Transit Subtract Outstanding Checks Journal Entries Cash 39300 38650 Accounts Rec Service Charge Interest Rec 650 300 50 38650 1000 50 300 39300 45000 10000 15700 39300 1000 2 Petty Cash Kara s Kayaks Inc created a 300 imprest petty cash account July 1 2002 with Matt as the fund custodian During July Matt authorized and paid the following petty cash tickets 1 2 3 4 Staples Dinner w client Postage Taxi 25 00 20 00 15 00 10 00 At the end of July 230 is left in the petty cash box A Show journal entry to establish fund on July 1 Petty Cash Cash B C 300 300 Show journal entry to replenish fund on July 31 Supplies Food Postage Transport Cash 10 25 20 15 70 Show entry needed if fund is increased to 350 Petty Cash Cash 50 50 3 Inventory Thirsty Paul owns a store that had a beginning inventory of 32 cases of Plastic Bottle Tequila that cost 7 00 each During the first month of operations the store purchased inventory as follows 35 8 00 280 20 7 50 150 38 8 50 323 Purchase No 1 Purchase No 2 Purchase No 3 The ending inventory consists of 42 cases of tequila Calculate ending inventory and cost of goods sold Beginning Inv 32 7 00 224 a Weighted average cost b FIFO cost c LIFO cost Ending Inventory 42 7 82 328 353 304 Cost of Goods Sold 83 7 82 649 624 673 Weighted Average 32 35 20 38 125 FIFO 224 280 150 323 977 977 125 7 82 COGS 16 7 5 35 8 0 32 7 0 624 EI 38 8 5 4 7 5 353 LIFO COGS 25 8 0 20 7 5 38 8 5 673 EI 32 7 0 10 8 0 304 4 Estimating Inventory Gross Margin Method The following information is available for Rasmussen s Super Supplies Inc for 2006 Beginning Inventory Net Purchases Net Sales 35 000 80 000 150 000 Historically gross margin is 40 of sales Estimate ending inventory using the gross margin method 1 Find GM 2 Find COGS 3 Find EI Retail Method GM GM Sales 150 000 4 60 000 Sales GM COGS 150 000 60 000 90 000 BI Purchases COGS EI 35 000 80 000 90 000 25 000 The following information is available for Brittany s Emporium for 2006 Beginning Inventory Purchases Goods Available Sales Cost 20 000 63 000 83 000 Retail 28 000 75 000 103 000 82 000 Calculate ending inventory at cost using the retail method 1 Find Cost Ratio GAS at Cost GAS at Retail 83 000 103 000 806 2 Find COGS Cost Ratio Sales COGS 806 82 000 66 092 3 Find EI GAS COGS 83 000 66 092 16 908 5 LCM At the beginning of the 2007 season Rylee had 100 burritos costing 7 each During the season Rylee bought additional 200 burritos at 10 each Also during the year many imitation burritos were sold driving down the value of the originals At the end of the year there were 150 burritos left which could be sold for 1 each 1 What are Costs of Goods Sold before applying lower of cost or market LCM concept using FIFO and FIFO assumptions 2 Using FIFO assumption apply LCM Use T accounts please 1 FIFO 100 7 700 50 10 500 LIFO BB GAS COGS 1200 150 10 1500 Inventory 700 2 000 2 700 EI before LCM 1500 EI after LCM 150 COGS 1 200 1 350 write down COGS 1 200 1 350 6 Basket Purchase Mike s Rockstar Co purchased a spinning drum set a gold plated microphone set and lighting equipment for a lump sum payment of 60 000 The company hired an appraiser to determine the fair market value of the individual assets The fair market value of the drum set is 20 000 the microphone set is 16 000 and lighting equipment is 44 000 Make the required journal entry to record the purchase Asset Total FMV Ratio of Total FMV FMV of All Assets for Each Asset Drum Set 20 000 80 000 Microphone 16 000 80 000 Lighting Equipment 44 000 80 000 Asset 25 20 55 Ratio of Total Cost of Total FMV Basket Purchase Drum Set 25 Microphone 20 Lighting Equipment 55 Total 60 000 60 000 60 000 Allocated Cost 15 000 12 000 33 000 60 000 7 Depreciation Ellie s Jukebox Company purchased equipment on 1 1 00 for 500 000 The estimated residual value is 5 of the purchase price and estimated useful life is 10 years The company also estimated that the equipment would produce 500 000 units over its useful life In year one the company produced 47 500 units and in year two the company produced 43 250 units Compute the depreciation expense for the first two years using the following methods a straight line Method Year 1 Year 2 475 000 47 500 10 475 000 47 500 10 b Double Declining Balance Method Year 1 500 000 1 10 2 100 000 Year 2 400 000 1 10 2 80 000 c Sum of the years digits Method Not needed for this course d Units of Production Method 475 000 95 per unit depr 500 000 Year 1 47 500 95 45 125 Year 2 43 250 95 41 087 50 8 e Assume Ellie s uses double declining balance depreciation disregard parts a c and d On July 1 2001 she exchanges the equipment for similar equipment The new similar equipment had a market value of 480 000 Ellie s also paid 100 000 in cash for the new equipment Make the journal entry for the exchange Accum Depr New Equipment Old Equipment Cash 140 000 460 000 500 000 100 000 Year 1 Year 2 Accum Depr 100 000 5 80 000 140 000 f Disregard part e Assume instead that the company sells the equipment for 300 000 cash on July 1 2002 Prepare the journal entry for this transaction assuming the company use straight line depreciation Cash 300 000 Accum Depr 118 750 Loss on Sale 81 250 Old Equipment 500 000 Year 1 Year 2 Year 3 Accum Depr 47 500 47 500 5 47 500 118 750 9 ACCOUNTS RECEIVABLE AND BAD DEBTS Ryan s Money Co estimates bad debts at the end of each month using the percentage of credit sales method The company had credit sales of 250 000 for the month of July and estimates that 8 of those will be uncollectable On July 31 the balance in Accounts Receivable was 325 …


View Full Document

Access the best Study Guides, Lecture Notes and Practice Exams

Loading Unlocking...
Login

Join to view Exam II Review Key and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Exam II Review Key and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?