Your Name______________________________________________

Instructions:

1.    Type your complete name on every page at the top.

2.    Complete all 12 problems.  You must show all your work, including all calculations.

3.    Type your answers immediately under each question.  Your exam must include both the given questions and your complete answers.

Problem #1 –
The following information is available to reconcile Litner Co.’s book balance of cash with its bank statement cash balance as of April 30. The April 30 cash balance

according to the accounting records is $78,356, and the bank statement cash balance for that date is $83,525.

a. The bank erroneously cleared a $480 check against the account in April that was not issued by Litner. The check documentation included with the bank statement

indicates the check was actually issued by Lightning Co.
b. On April 30, the bank issued a credit memorandum for $53 interest earned on Litner’s account.
c. When the April checks are compared with entries in the accounting records, it is found that Check No. 1828 had been correctly drawn for $1,530 to pay for

advertising but was erroneously entered in the accounting records as $1,350
d. A credit memorandum indicates that the bank collected $10,000 cash on a note receivable for Litner, deducted a $30 collection fee, and credited the balance to the

company’s Cash account. Litner did not record this transaction before receiving the statement.
e. A debit memorandum of $895 is enclosed with the bank statement for an NSF check for $870 received from a customer. The bank assessed a $25 fee for processing it.
f. Litner’s April 30 daily cash receipts of $5,102 were placed in the bank’s night depository on that date, but do not appear on the April 30 bank statement.
g. Litner’s April 30 cash disbursements journal indicates that Check No. 1837 for $584 and Check No. 1840 for $1,219 were both written and entered in the accounting

records, but are not among the canceled checks.

1.  Prepare the bank reconciliation for this company as of April 30.

2.  Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of April 30.

Problem #2 –
A company purchased merchandise inventory costing $15,000 with credit terms of 2/10, n/30 on November 7. On November 15, the company paid 1/3 of the amount due. The

remaining balance was paid on December 7.

Required:
a. Record the journal entries related to this transaction using the gross method of recording purchases.

b. Record the journal entries related to this transaction using the net method of recording purchases.

c. Which method do you prefer?  Why?

Problem #3
Timmons Company had a January 1, balance in its Allowance for Doubtful Accounts of $7,000 for the current year. The following transactions and events affected the

Allowance for Doubtful Accounts during the current year:

a. What amount should appear in the allowance for doubtful accounts in the December 31, balance sheet for the current year?
b.    How are the direct write-off method and the allowance method applied in accounting for uncollectible accounts receivables? Please explain in words.

Problem #4 –
A company purchased a machine for $75,000 that was expected to last 6 years and to have a salvage value of $6,000. At the beginning of the machine’s fourth

year the company decided that the machine’s estimated useful life should be revised to a total of 10 years instead of 6 years. Also, the salvage value was re-estimated

to be $5,500. Straight-line depreciation was used throughout the machine’s life. Calculate the depreciation expense for the fourth year of the machine’s useful life.

Problem #5
A company made the following expenditures in connection with the construction of its new building:

Prepare a schedule showing the amounts to be recorded as Land, Buildings, and Machinery.

Problem #6  – 5 points  (Chapter 11)
A company sells computers at a selling price of $1,800 each. Each computer has a 2 year warranty that covers replacement of defective parts. It is estimated that 2% of

all computers sold will be returned under the warranty at an average cost of $150 each. During November, the company sold 30,000 computers, and 400 computers were

serviced under the warranty at a total cost of $55,000. The balance in the Estimated Warranty Liability account at November 1 was $29,000. What is the company’s

warranty expense for the month of November?

Problem #7
Xtreme Sports has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Xtreme Sports also has $500,000 of common stock outstanding.

In the company’s first year of operation, no dividends were paid. During the second year, Xtreme Sports paid cash dividends of $30,000. How should this dividend be

distributed between common and preferred stockholders? Show your calculations.

Problem #8
Information for the Ace Manufacturing Company follows:

Calculate the cost of goods manufactured for this company.

Problem #9 – 10 points  (Chapter 19)
The following calendar year information about the Tahoma Corporation is available on December 31:

The company applies overhead on the basis of 125% of direct labor costs.

a.  Calculate the amount of over- or under-applied overhead.

b.  What is the significance of this over- or under-applied amount of overhead?

Problem #10 – 10 points  (Chapter 22)

Michael Coe (The Ancient Maya)

our largest single assignment will be to write a review paper discussing a secondary source – a paper that reviews a ‘history book’ from the list below.

1. Michael Coe (The Ancient Maya)

2. Anna Lanyon (Malinche’s Conquest)

3. Marc Aronson (Witch-Hunt: Mysteries of the Salem Witch Trials)

4. William Cronon (Changes in the Land: Indians, Colonists and the Ecology of New England)

5. Gwenda Morgan (The Debate on the American Revolution)

6. Alfred Young (Masquerade: The Life and Times of Deborah Sampson)

7. Douglas R. Edgerton (Gabriel’s Rebellion: The Virginia Slave Conspiracies of 1800 and 1802)

8. William Hogeland (The Whiskey Rebellion: George Washington, Alexander Hamilton, and the Frontier Rebels Who Challenged America’s Newfound Sovereignty)

9. Glenn Tucker (Tecumseh: A Vision of Glory)

10. Daniel Walker Howe (What Hath God Wrought: the Transformation of America, 1815-1848)

11. Amy H. Sturgis (The Trail of Tears and Indian Removal)

12. Paul E. Johnson and Sean Wilentz (The Kingdom of Matthias: A Story of Sex and Salvation in 19th-Century America)

13. Amy S. Greenberg (A Wicked War: Polk, Clay, Lincoln, and the 1846 U.S. Invasion of Mexico)

14. Tyler Anbinder (Nativism and Slavery: The Northern Know Nothings and the Politics of the 1850?s)

15. Eric Foner (Reconstruction: America’s Unfinished Revolution, 1863-1877)

These are all books that can be found through the LCC library, the Laredo Public Library, or ordered online.

The below links should help you distinguish between a book review and a book report –

Link

Link

https://apps.carleton.edu/curricular/history/resources/study/criticalbookreview/

In short terms, a book report tells readers what’s inside a book – a book review tells readers what the book accomplishes.

DO NOT WRITE A BOOK REPORT

Your paper is due on August 14, 2014 at midnight.

Your paper should be about 2000 words long (that’s about eight double-spaced pages). Use Times New Roman 12 point font with standard margins. Use standard citations

for the book and any other sources you may use, as found here.

https://owl.english.purdue.edu/owl/resource/717/01/

A company has a goal of earning $100,000 in after-tax income. The company must pay $28,000 in income tax if it achieves the goal. The contribution margin ratio is

30%. What dollar amount of sales must be achieved to reach the goal if fixed costs are $64,000?
Problem #11 – 10 points (Chapter 22)
Hess Co. manufactures a product that sells for $12 per unit. Total fixed costs are $96,000 and variable costs are $7 per unit. Hess can buy a newer production machine

that will increase total fixed costs by $22,800 but variable costs will be decreased by $0.40 per unit. What effect would the purchase of the new machine have on

Hess’s break-even point in units?