ACCT220: Principles of Accounting I -Final Examination

Question 2: 15% points:The following information is available for Flip Company:Beginning inventory600 units at $5First purchase900 units at $6Second purchase500 units at $7.25Assume that Flip uses a periodic inventory system and that there are 700 units left at the end of the month. (Round all final answers to the nearest dollar.)Instructions:a. Compute the cost of goods available for sale.b. Compute the value of ending inventory and Cost of Good Sold under the (1) LIFO method.(2) FIFO method.(3) Average-cost methodQuestion 3: 15% points:The following items were taken from the post adjusted trial balance of Flap Company.(All balances are normal.)Mortgage payablePrepaid expensesEquipmentLong-term investmentsShort-term investmentsNotes payable in 2015CashRent ExpenseUtilities Expense$ 1,44388011,0001,1001,6961,0001,7561,0001,000Accumulated depreciationAccounts payableNotes payable after 2016Flap’s capitalAccounts receivableInventoriesService RevenueWages Expense3,6551,4441,20010,4802,6902,1009,0005,000Instructions: Prepare a classified balance sheet in good form as of December 31, 2014.Question 4: 10% points:Prepare journal entries to record the following transactions entered into by FlipCompany:2012June 1Accepted a $10,000, 12%, 1-year note from Flop as full payment on heraccount.Nov. 1Sold merchandise on account to Flap, Inc. for $12,000, terms 2/10, n/30.Nov. 5Flap, Inc. returned merchandise worth $500.Nov. 9Received payment in full from Flap, Inc.Dec. 31Accrued interest on Flop’s note.2013June 1Flop honored her promissory note by sending the face amount plus interest.No interest has been accrued in 2013Question 5: 10% points:Flip Company purchased equipment on July 1, 2011 for $90,000. It is estimated that theequipment will have a $5,000 salvage value at the end of its 5-year useful life. It is alsoestimated that the equipment will produce 100,000 units over its 5-year life.InstructionsAnswer the following independent questions.1. Compute the amount of depreciation expense for the year ended December 31, 2011,using the straight-line method of depreciation.2. If 14,000 units of product are produced in 2011 and 26,000 units are produced in2012, what is the book value of the equipment at December 31, 2012? The companyuses the units-of-activity depreciation method.3. If the company uses the double-declining-balance method of depreciation, what is thebalance of the Accumulated Depreciation—Equipment account at December 31,2013?Question 6: 10% points:Flip earns a salary of $7,500 per month during the year. FICA taxes are 8% on the first$100,000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first$7,000; however, a credit is allowed equal to the state unemployment insurance taxes of5.4% on the $7,000. During the year, $25,600 was withheld for federal income taxes and$5,700 was withheld for state income taxes.Instructions(a) Prepare a journal entry summarizing the payment of Flip’s total salary during theyear.(b) Prepare a journal entry summarizing the employer payroll tax expense on Flip’ssalary for the year.(c) Determine the cost of employing Flip for the year.Multiple choice questions allocated 1% point each. Make your selection byrecording the letter in the answer box provided.