DeVry Chicago ACCT 212 Final Exam

Q1. At the
end of the period it is necessary to close all temporary accounts. (1)
Explain why this process is required and (2) provide an example of the
closing of an expense account, Salary Expense in the form of a journal entry.

Q2.
As
required to complete Course Project 1, one must follow the cycle that
includes 10 steps to complete the accounting cycle. (1) Explain how the
debit/credit rules are used when developing journal entries and (2) provide
an example of the application of the debit/credit rules in the form of a
journal entry.

Q3.Internal
Control Procedures are required to safeguard company assets and to ensure
ethical operation of the business. (1) Explain how limited access can satisfy
the purpose of internal control and
(2) provide an example of how this control could be implemented.

Q4.
Inventory valuation methods determine the
cost of goods sold and the inventory balance. (1) Explain how the First in
First out (FIFO) method is applied and (2) provide an example of the impact
that this method of inventory valuation will have on Gross Profit.

Q5. To
evaluate the financial operation and health of a business ratio analysis is
used. (1) Provide the formula for the Current Ratio and explain how it is
computed and (2) provide an example of how this ratio can be used in
decision-making in business.

PART
II-

Q6.BagODonuts
Company bought a used delivery truck on January 1, 2010, for $19,200. The van
was expected to remain in service 4 years (30,000 miles). BagODonuts’
accountant estimated that the truck’s residual value would be $2,400 at the
end of its useful life. The truck traveled 8,000 miles the first year,
8,500 miles the second year, 5,500 miles the third year, and 8,000 miles in
the fourth year.

1. Calculate depreciation expense for the truck for each year
(2010-2013) using the:
a. Straight-line method.
b. Double-declining balance method.
c. Units of Production method.
(For units-of-production and double-declining balance, round to the
nearest two decimals after each step of the calculation.)
2. Which method best tracks the wear and tear on the van?
3. Which method would BagODonuts prefer to use for income tax
purposes? Explain in detail why BagODonuts prefers this method.

Q7. ABC
Inc. was incorporated on 1/15/12. Their corporate charter authorized the
following capital stock: Preferred Stock: 7%, par value $100 per share,
100,000 shares. Common Stock: $1 par value, 500,000 shares.

The following transactions occurred
during the year:

Q8. Fraud
is an intentional misrepresentation of facts, made for the purpose of
persuading another party to act in a way that causes injury or damage to that
party. In our readings and discussions we have seen several examples of
fraud in business. Using that experience (1) provide an example of a
common fraudulent practice in business with an explanation of how the
practice works and (2) name and describe each of the elements of the Fraud
Triangle.

Q10. Below are the accounts of Super Pool Service, Inc. The
accounts have normal balances on June 30, 2012. The accounts are listed in no
particular order.

Account

Balance
Common
stock
$5,100
Accounts
payable
$4,400
Service
revenue
$17,100
Land $28,800
Note
payable
$9,500
Cash $5,200
Dividends
$6,100
Utilities
expense
$2,100
Accounts
receivable
$10,600
Delivery
expense
$700
Retained
earnings
$25,600
Salary
expense
$8,200

Prepare the company’s trial balance as of June 30, 2012,
listing accounts in proper sequence, as illustrated in the chapter. For
example, Accounts Receivable comes before Land. List the expense with the
largest balance first, the expense with the next largest balance second, and
so on.

Q11. Linda’s Lampshades started business on Jan. 1, 2001. They
had the following inventory transactions:

Journals
– Jan. 2001

Purchases

Supplier
Date
Received Quantity
Unit Cost Amount

Donna
01/10/01 110
12.00
1320.00

Thomas
01/15/01 160
14.00
2240.00

Cindy
01/18/01 150
15.00
2250.00

Sales

Customer
Date shipped Quantity Sel.
Price

Amount

Norilene
01/16/01
200
25.00 5000.00

B. Using LIFO

C. Using Average Cost

2. Prepare the following
statement

Using

FIFO LIFO
Average Cost

Sales

Cost of
Sales
Gross Profit