Strayer University

Dr Jan D Felton

Jan.Felton@Strayer.edu

Accounting 11 Final Exam

Name Demond Scott Date 9/5/2010

1. S9-6- page 511- Compute depreciation on the machine for the year ended December 31, 2011

Using the straight-line method. $6000

2. E9-13-page 513 – Determine the cost of the land, land improvements, and building. #1- only.

Land= $372,500 Building= $550000 Land Improvements= $73,000

3. Discuss the major characteristics of plant assets.

Plant assets can be referred to as equipment, property, and buildings. Plant assets are items
that the company holds for use in their business and are relatively expensive. The can not be
sold or traded. Plant assets last for several years and should be allocated over the years they are
expected to be used. The full cost invested in these assets can be challenge to determine due to
difficulty of tracking installation, shipping, and other costs related to the asset.

4. S-10-16- page 561-

1. Journalize the issuance of bonds on August 1, 2012.
2. Journalize the accrual of interest on December 31, 2012,
3. Journalize payment of the first semiannual interest amount on February 1, 2013

2012

Aug. 1 Cash $90,000

Bonds Payable $90,000

Issued bonds

Dec. 31 Interest expense $3375

Cash $3375

Closed out year

2013

Bonds payable $4050

Cash $4050

Paid off bonds at maturity

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5. S10-18- page 562 – Prepare the liabilities section of Grand Suites’ balance sheet at December
31, 2011.
Grand Suites Hotels
Balance Sheet
December 31, 2011

Liabilities

Current liabilities:

Interest payable $1,100

Estimated warranty payable $1,500

Accounts payable $38,000

Salary payable $3,000

Sales tax payable $700

Total current liabilities $44,300

Long-term liabilities:

Long-term note payable $100,000

Bonds payable, net discount of 12,750 $412,250

Total long-term liabilities $512,250

Total liabilities $556,550

6. Decision Case study #2 Sell-Soft Company on page 573. Requirements: Answer the following
questions: 1. Why would a company prefer not to disclose its contingent liabilities?
2. Describe how a bank could be harmed if a company seeking a loan did not disclose
its contingent liabilities?

7. S11-5- page 623- Journalize the company’s issuance of the stock for cash.

2010

Dec. 31 Cash $7,950

Common stock $4,000

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 Paid in capital in $3,950
excess of par

8. S11-8, page 624 – Journalize the cash dividends on December 15, 2010.

2010

Dec. 15 Retained earnings $67,200

Dividends payable $67,200

Declared a cash
dividends

2011

Jan. 4 Dividends payable $67,200

Cash $67,200

Paid cash on dividends

9. S11-6, page 623 –Prepare the stockholders’ equity section of the Valleyview’s balance sheet.

Stockholders’ Equity

Common stock, $2 par value, $80,000

40,000 shares issued

Paid in capital in excess of par $16,800

Total paid in capital $96,800

Retained earnings $17,000

Total stockholders’ equity $113,800

10. S-12-8. Page 668 –Prepare OLP’s income statement for the year ended December 31, 2012.

OLP

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 Income Statement

Year Ending December 31, 2012

Net sales revenue $176,000

Cost of goods sold $74,000

Gross profit $102,000

Operating expense $58,000

Operating income $44,000

Other Gains (losses) $(15,000)

Gain on sales $10,000

Income before taxes $39,000

Income tax expense $15,600

(39000*0.40)

Income from operating $23,400

Extraordinary loss $3,000

Less tax $2,000 ($5,000*0.4)

Net Income $20,400