《中级财务会计》期中考试试题(英文版)

091学期中级财务会计期中考试试卷考试时间：3.5小时 Question One (13 points)Listed below are several information characteristics and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application. (Items a through k may be used more than once or not at all.)a.Economic entity assumptiong.Matching principleb.Going concern assumptionh.Full disclosure principlec.Monetary unit assumptioni.Relevance characteristicd.Periodicity assumptionj.Reliability characteristice.Historical cost principlek.Consistency characteristicf.Revenue recognition principle1.Stable-dollar assumption (do not use historical cost principle).2.Earning process completed and realized or realizable.3.Presentation of error-free information with representational faithfulness.4.Yearly financial reports.5.Accruals and deferrals in adjusting and closing process. (Do not use going concern.)6.Useful standard measuring unit for business transactions.7.Notes as part of necessary information to a fair presentation.8.Affairs of the business distinguished from those of its owners.9.Business enterprise assumed to have a long life.10.Valuing assets at amounts originally paid for them.11.Application of the same accounting principles as in the preceding year.12.Summarizing significant accounting policies.13.Presentation of timely information with predictive and feedback value.Question Two (6 points)The trial balance before adjustment of Pratt Company reports the following balances: Dr. Cr.Accounts receivable$100,000Allowance for doubtful accounts$ 2,500Sales (all on credit)750,000Sales returns and allowances40,000Required:(a)Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales.(b)Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $2,500 instead of a credit balance. Prepare the journal entry to record the bad debt expense?Question Three (9 points)The following trial balance was taken from the books of Fisk Corporation on December 31, 2007.Account Debit Credit Cash$ 12,000Accounts Receivable40,000Note Receivable7,000Allowance for Doubtful Accounts$ 1,800Merchandise Inventory44,000Prepaid Insurance4,800Furniture and Equipment125,000Accumulated Depreciation-F. & E.15,000Accounts Payable10,800Common Stock44,000Retained Earnings55,000Sales280,000Cost of Goods Sold111,000Salaries Expense50,000Rent Expense 12,800 Totals$406,600$406,600At year end, the following items have not yet been recorded. a.Insurance expired during the year, $2,000. b.Estimated bad debts, 1% of gross sales. c.Depreciation on furniture and equipment, 10% per year. d.Interest at 6% is receivable on the note for one full year.e.Rent paid in advance at December 1, $6,000 for half a year f.Accrued salaries at December 31, $5,800.Required:(a)Prepare the necessary adjusting entries.(b)Prepare the necessary closing entries.Question Four (6 points)On May 1, Carter, Inc. factored $800,000 of accounts receivable with Rapid Finance on a without recourse basis. Under the arrangement, Carter was to handle disputes concerning service, and Rapid Finance was to make the collections, handle the sales discounts, and absorb the credit losses. Rapid Finance assessed a finance charge of 6% of the total accounts receivable factored and retained an amount equal to 2% of the total receivables to cover sales discounts.Required:(a)Prepare the journal entry required on Carter s books on May 1.(b)Prepare the journal entry required on Rapid Finances books on May 1.(c)Assume Carter factors the $800,000 of accounts receivable with Rapid Finance on a with recourse basis instead. The recourse provision has a fair value of $14,000. Prepare the journal entry required on Carters books on May 1.Question Five (6 points)Dent Company manufactures one product. On December 31, 2005, Dent adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was $180,000. Inventory data are as follows:Inventory atPrice indexYearyear-end prices(base year 2005)2006$252,0001.052007368,0001.152008387,5001.25InstructionsCompute the inventory at December 31, 2006, 2007, and 2008, using the dollar-value LIFO method for each year.Question Six (9 points)On January 1, a store had inventory of $48,000. January purchases were $46,000 and January sales were $90,000. On February 1 a fire destroyed most of the inventory. The rate of gross profit was 25% of cost. Merchandise with a selling price of $5,000 remained undamaged after the fire. Compute the amount of the fire loss, assuming the store had no insurance coverage. Label all figures.Question Seven (5 points)Accounts receivable in the amount of $250,000 were assigned to the Fast Finance Company by Nance, Inc., as security for a loan of $200,000. The finance company charged a 4% commission on the face amount of the loan, and the note bears interest at 9% per year.During the first month, Nance collected $130,000 on assigned accounts. This amount was remitted to the finance company along with one months interest on the note.Required:Make all the entries for Nance Inc. associated with the transfer of the accounts receivable and the remittance to the finance company.Question Eight (6 points)A machine which cost $200,000 is acquired on October 1, 2006. Its estimated salvage value is $20,000 and its expected life is eight years.Required:Calculate depreciation expense for 2006 and 2007 by each of the following methods, showing the figures used.(a)Double-declining balance(b)Sum-of-the-years-digitsQuestion Nine (8 points)Ferry Corporation follows a policy of a 10% depreciation charge per year on all machinery and a 5% depreciation charge per year on buildings. The following transactions occurred in 2007:March 31, 2007Negotiations which began in 2006 were completed and a warehouse purchased 1/1/98 (depreciation has been properly charged through December 31, 2006) at a cost of $3,200,000 with a fair market value of $2,000,000 was exchanged for a second warehouse which also had a fair market value of $2,000,000. The exchange had no commercial substance. Both parcels of land on which the warehouses were located were equal in value, and had a fair value equal to book value.June 30, 2007Machinery with a cost of $240,000 and accumulated depreciation through January 1 of $180,000 was exchanged with $150,000 cash for a parcel of land with a fair market value of $230,000.Required:Prepare all appropriate journal entries for Ferry Corporation for the above dates.Question Ten (7 points)On March 1, Gatt Co. began construction of a small building. The following expenditures were incurred for construction:March 1$ 75,000April 1$ 74,000May 1180,000June 1270,000July 1100,000The building was completed and occupied on July 1. To help pay for construction $50,000 was borrowed on March 1 on a 12%, three-year note payable. The only other debt outstanding during the year was a $500,000, 10% note issued two years ago.Required:(a)Calculate the weighted-average accumulated expenditures.(b)Calculate avoidable interest.Question Eleven (5 points)The management of Yastrzemski Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $1,200,000 with depreciation to date of $300,000 as of December 31, 2007. On December 31, 2007, management projected its future net cash flows from this equipment to be $700,000 and its fair value to be $600,000. The company intends to use this equipment in the future.Required:(a) Prepare the journal entry (if any) to record the impairment at December 31, 2007.(b) Where should the gain or loss (if any) on the write-down be reported in the income statement?(c) At December 31, 2008, the equipments fair value increased to $700,000. Prepare the journal entry (if any) to record this increase in fair value.Question Twelve (8 points)Buhner Company constructed a building at a cost of $3,000,000 and occupied it beginning in January 1988. It was estimated at that time that its life would be 40 years, with no salvage value.In January 2008, a new roof was installed at a cost of $500,000, and it was estimated then that the building would have a useful life of 25 years from that date. The cost of the old roof was $200,000.Required:(a) What amount of depreciation should have been charged annually from the years 1988 to 2007?(Assume straight-line depreciation.)(b) What entry should be made in 2008 to record the replacement of the roof?(c) Prepare the entry in January 2008, to record the revision in the estimated life of the building, ifnecessary.(d) What amount of depreciation should be charged for the year 2008?Question Thirteen (7 points)At 12/31/06, the end of Feeney Companys first year of business, inventory was $4,100 and $2,800 at cost and at market, respectively.Following is data relative to the 12/31/07 inventory of Feeney:OriginalNetNet RealizableAppropriateCostReplacementRealizableValue LessInventory ItemPer Unit Cost Value Normal Profit ValueA$ .65$ .45B.45.40C.70.75D.75.65E.90.85Selling price is $1.00/unit for all items. Disposal costs amount to 10% of selling price and a normal profit is 30% of selling price. There are 1,000 units of each item in the 12/31/07 inventory.Required:(a)Prepare the entry at 12/31/06 necessary to implement the lower-of-cost-or-market procedure assuming Feeney uses a contra account for its balance sheet.(b)Complete the last three columns in the 12/31/07 schedule above based upon the lower-of-cost-or-market rules.(c)Prepare the entry(ies) necessary at 12/31/07 based on the data above.Question Fourteen (8 points)On December 31, 2007, Brown Company finished consultation services and accepted