Example Pretest for Accounting 5101 This practice test was based on the most recent academic year’s Accounting 5101 pretest given. While it is not intended as a study guide, nor should be taken as evidence of the topics that will be on the pretest you will take, it should offer you insight into the format, difficulty, and length of the test you will take. The weights assigned to the problems in this test are as follows: Part 1: Fundamentals Problem Description Points 1 Adjusting Journal Entries and Financial Statements 302 Cash Flow Statements 203 Stockholders' Equity 10Total Points 60 Part 2: Selected Issues Problem Description Points 4 Accounts Receivable 105 Inventory 106 Fixed Assets 107 Future Value and Present Value Concepts 108 Bonds Payable 109 Assorted Topics—Multiple Choice 1010 Assorted Topics—Essay 10Total Points 70 Our analysis of the performance of students who have taken Intermediate Accounting in the past has helped us to better identify the course content skills needed to successfully compete the course. The requirement to pass the pretest, or to complete Acct 2050 with a grade of A or B, is an outcome of that analysis. The minimum percentage for passing the pretest is 70%. If you scored higher than 65%, you may elect to retake the pretest one time only. For example, if this pretest were the actual test you took, you would need to score at least 91 out of 130 total points for a total passing percentage of 70%.2Practice PretestProblem 1: Adjusting Journal Entries and Financial Statements Snorkle-ooo Technology, Inc., a retailer of blue-rubber swim-fins, has a December 31, 2000 year-end for accounting purposes. Snorkle-ooo gives you the following unadjusted trial balance as of December 31, 2000. Account Debit CreditCash 45,000 Accounts Receivable 135,000 Inventory 415,000 Prepaid Expenses 32,000 Property, Plant and Equipment 233,000 Selling and Administrative Expense 95,000 Accumulated Depreciation 55,000 Accounts Payable 25,000 Notes Payable 80,000 Common Stock ($1 par value) 75,000 Additional Paid-in Capital (Common Stock) 20,000 Retained Earnings 75,000 Sales Revenue 625,000 Column Totals 955,000 955,000 Additional Information: 1. Snorkle-ooo debits its inventory account whenever inventory is purchased. A physical count of the inventory on December 31, 2000 found that inventory costing $99,400 was on hand. Assume Snorkle-ooo records Cost of Good Sold Expense once a year, at the end of the year. 2. The property, plant and equipment account includes property and equipment costing $180,000 that should be depreciated under the straight-line method. Assume a 6-year life and no salvage value. 3. The amount shown as Prepaid Expenses relates to rent paid in advance on Snorkle-ooo's retail outlet. This amount covers sixteen months and was paid on January 1, 2000. 4. The Notes Payable are 8%, 4-year notes issued on January 1, 2000. Interest is payable once a year, on January 1. 5. Snorkle-ooo has a 40% tax rate.3Practice PretestRequired Prepare the journal entries necessary at the end of 2000 (see Additional Information 1 through 5). Closing entries are not required. Date Accounts debits credits Dec 30, 2000 COS 315600 Inventory 315600 Depreciation 30000 Accumulated Deprecation 30000 Rent Expense 24000 Prepaid Rent 24000 Interest Expense 6400 Interest Payable 6400 Income Tax Expense 61600 Income Tax Payable 616004Practice PretestPrepare a balance sheet as of December 31, 2000. Assets Liabilities Current Assets Current Liabilities Cash 45000 AP 25000 AR 135000 Income Taxes 61600 Inventory 99400 Interest 6400 Prepaid Expenses 8000 93000 287400 Noncurrent Liabilities Note Payable 80000 Noncurrent Assets PP&E 233000 Equity Less Accumulated Depreciation -85000 Common Stock 75000 Net PP&E 148000 APIC 20000 Retained Earnings 167400 262400 435400 435400 Prepare a multi-step income statement for the year ending December 31, 2000. Sales 625000 Cost of Sales 315600 Gross Margin 309400 Selling & Administrative 95000 Rent 24000 Interest 6400 Depreciation 30000 Income Before Income Taxes 154000 Income Taxes 61600 Net Income 92400 A properly formatted income statement would include a subtotal for gross margin and income before income taxes.A properly formatted income statement would include section headings are well as subtotals for current portions of assets and liabilities, net non-current assets, equity, total assets and total liabilities and equity. Retained earnings should of course be ending, not beginning, retained earnings.5Practice PretestProblem 2: Cash Flow Statement Springz, producer of maps, gives you the following balance sheets information for the year ended December 31, 2000: Balance Sheet Information Dec 31, 2001 Dec 31, 2000 Change Cash 25 50 (25) Available for Sale Securities 225 260 (35) Accounts Receivable – Net 180 110 70 Inventory 270 190 80 Land 390 450 (60) Buildings and Equipment 740 740 - Accumulated Depreciation 105 85 20 1,935 1,885 Deferred Income Taxes 15 20 (5) Accounts Payable 160 170 (10) Dividends Payable 20 - 20 Income Taxes Payable 5 15 (10) Bonds Payable 805 900 (95) Common Stock (no par) 610 500 110 Preferred Stock (no par) 50 50 - Unrealized Loss on Available for Sale Securities (35) - (35) Treasury Stock (65) (60) (5) Retained Earnings 160 120 40 1,935 1,885 Springz also gives you this additional information for the year ending December 31, 2000: 1. For the year, the company reported: - Net income of $60 - Dividends were declared but not yet paid of $20 - Amortization of bond discount of $15 - Gain on the sale of land of $40 2. Springz Company had the following transactions pertaining to property, plant and equipment during the year: - Sold land for $100 cash 3. Springz did not buy or sell any marketable securities during the year. 4. Springz Company had the following transactions pertaining to shareholders’ equity during the year: - Bondholders of Springz Company converted $110 of Bonds into common