AC11 Exam #3 Fall 2006

Suffolk County Community College

Prof. Rovegno

1. Slade’s Book Store's checkbook showed a balance of $26,807.40 on Sept. 30. The bank statement for Sept.

showed a balance of $40,056.40. A comparison of the company books & the bank statement revealed the following reconciling items:

A) Three checks totaling $5,919.60 had been written near the end of Sept. and were not returned with the bank

statement. B) A deposit for $2,573.80 was made too late to appear on the bank statement. C) The bank statement showed that a $4,000 Note Receivable and $200 interest had been collected. The bank charged a $20 fee for this service. D) The bank statement showed a $6,100 EFT (electronic funds transfer) had been received from Boxcar Co. (this was a collection of an A/R). E) Other service charges noted on the bank statement amounted to $106.80. F) A $547 check had been correctly written to pay an account payable owed to Emerald Book Supply Co. When the transaction was recorded in the journal and when entered in the checkbook, the bookkeeper wrote $457. G) A check which had been written for $100 was returned with the bank statement but was shown by the bank as $180. H) A check for $100 which had been collected from GoriX Co. on account, was returned by the bank as NSF. A) PREPARE A BANK STATEMENT RECONCILIATION. B) RECORD THE APPROPRIATE JOURNAL ENTRIES.

REQUIRED:

2. Blackburn Co. had a credit balance of $800 in their Allowance for Bad Debts account on Jan. 1, 200B. The following selected transactions for Blackburn Co. occurred during the fiscal year that ended Dec. 31, 200B: June 9 - Sold merchandise, on account, to Eddy Co. $24,000 (Net 30 days). (do not record the cost of goods sold) June 28 - Sold merchandise, on account, to Jason Co. $30,000 (Net 30 days). (do not record the cost of goods sold) July 5 - Wrote off $1,200 owed by Bovine Bros. as uncollectible (use the "Allowance Method"). July 9 - Eddy Co. requested a 3 month extension of time to pay for its June 9 purchase. Blackburn received a $24,000, 3-month, 9% promissory note from Eddy. July 28 - Jason Co. requested a 3 month extension of time to pay for its June 28 purchase. Blackburn received a $30,000, 3-month, 8% note from Jason. Aug. 1 - Reinstated the account of Poultry Corp. which had been written off in 200A & collected $1,600 in full payment from Poultry Corp.. Oct. 9 - Received the full amount due from Eddy Co. on the July 9 note. Oct. 28 – Jason Co. dishonored the note of July 28, but full payment was still expected in the future. Dec. 30 – Received notice that Horn Co. (a customer) was bankrupt. Received 20% of the $1,000 balance due & wrote off the remainder as uncollectible. Dec. 31 - Record the adjusting entry for estimated bad debts. The estimate was based on an aging of A/R that showed $4,000 of bad debts. REQUIRED: Record the entries in the general journal (post any debits or credits that affect the “Allowance for Doubtful Accounts” account to the “T” account shown below ) Allowance for Doubtful Accounts 1/1/0B 800

AC11 Exam #3 Fall 2006

Suffolk County Community College

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Prof. Rovegno

3. A copy machine was purchased at the beginning of the fiscal year costing $20,000. It is expected to have a residual value of $2,000, and a useful life of 5 years (use 180,000 copies as the useful life for part "B"). REQUIRED: DETERMINE THE DEPRECIATION EXPENSE, ENDING ACCUMULATED DEPRECIATION, AND BOOK VALUE FOR EACH YEAR OF LIFE UNDER EACH OF THE FOLLOWING METHODS: A) STRAIGHT LINE B) UNITS OF ACTIVITY ActualCopies Made Year 1 40,000 Year 2 35,000 Year 3 55,000 Year 4 30,000 Year 5 20,000 B) 200% DOUBLE DECLINING BALANCE 4. Equipment which originally cost $15,000 on 1/1/01, had a useful life of 5 years and a residual value of $3,000 was being depreciated using the straight line method. The equipment was sold on June 30, 2005. REQUIRED:

A) RECORD THE ENTRY FOR DEPRECIATION UP TO THE DATE OF DISPOSAL. B) RECORD THE ENTRY TO REMOVE THE ASSET & THE ACCUMULATED DEPRECIATION FROM
THE BOOKS, INCLUDING ANY GAIN OR LOSS, ASSUMING THAT THE ASSET WAS SOLD FOR $3,500.

C) RECORD THE ENTRY TO REMOVE THE ASSET & THE ACCUMULATED DEPRECIATION FROM
THE BOOKS, INCLUDING ANY GAIN OR LOSS, ASSUMING THAT THE ASSET WAS SOLD FOR $5,000.

AC11 Exam #3 Fall 2006

Suffolk County Community College

Prof. Rovegno

5. The Expro Company has four employees who are paid wages on an hourly basis. They are paid time and a half for all hours worked in excess of 40 hours per week. The record of time worked, along with other data for the week ended December 7, 200X are presented below: REG. NAME HRS RATE Jones 40 $ 9.00 Kyle 43 8.00 Lane 47 12.00 Meeks 40 20.00 FWT SWT $40 $12 60 18 43 16 65 22 HEALTH INSUR $3 5 5 3 Cumulative OTHER 11/30 . $10 $ 94,300 -94,100 5 6,700 5 4,000

The "Other" deduction from Jones, Lane & Meeks is for charitable contributions to the United Way. Kyle & Meeks are salespersons while Jones & Lane are office employees. Tax rates and limits are as follows: INCOME RATE LIMIT . FICA-SS (EMPLOYEE & EMPLOYER) 6.20% $94,200 FICA-MED. (EMPLOYEE & EMPLOYER) 1.45% -NYS UNEMPL. INS. (SUI) (EMPLOYER) 4.50% 8,500 FED. UNEMPL. INS. (FUI) (EMPLOYER) 0.80% 7,000 REQUIRED: A) COMPLETE THE PAYROLL REGISTER (ON YOUR ANSWER SHEET) FOR THE WEEK ENDED 12/7/0X B) JOURNALIZE THE ENTRY TO RECORD THE PAYROLL. C) JOURNALIZE THE ENTRY TO RECORD THE EMPLOYER'S LIABILITY FOR PAYROLL TAXES.