York University AP/ADMS 2500.03 Introduction to Financial Accounting Mock Midterm Examination ...

30 Pages·2012·0.27 MB·English

York University AP/ADMS 2500.03
Introduction to Financial Accounting
Mock Midterm Examination #2

Instructions:

1. Submit: Only the pink mark sense sheet will be collected: you may keep this midterm examination
paper. Mark your answers on it for later reference.

2. Mark Sense Sheet:
 Record your name and student number and answer all questions on the computer mark sense
sheet provided with an HB (soft lead) pencil. Bring several pencils in case one breaks. The
computer will not recognize ink or hard lead pencils
 Test Form is 'B' and Code is your Section (in the left column)
 Fill in the bubbles for your name and student number in pencil (your phone number is not
required). Leave the last column of the student number BLANK
 If you change an answer, use a high quality eraser to completely remove the previous mark. If
the computer senses two answers to a question, only the first scanned will be recognized.

3. Exam Aids:
 Only calculators without alphanumeric programmable memories are allowed. It is strongly
suggested you bring a couple of cheap 4 function computers to the exam in case one fails. Be
prepared to be challenged by invigilators if you bring a “fancy” calculator.
 Compact foreign language/English dictionaries may be used. However, these will be
examined by invigilators. If there are any loose pages or handwriting in the dictionary, it will
be seized and you will be charged with academic dishonesty.
 In 2500, invigilators answer no questions of interpretation. They will pass along questions
regarding possible errors/ typos/missing data to the head invigilator. If you believe a question
contains an error and do not receive a response, make a detailed note at the back of your pink
mark sense sheet (make sure that you submit it).

4. Special Instructions
 Double check your transfers to the pink mark sense sheet.
 This exam contains several groups of questions based on the same set up. These are problems
(similar to those in the DVD or Lyryx) that have been arranged as multiple choice questions
 The exam clearly indicates when a group of questions are related to a single data set as:
Use the following data to answer Questions 1 to 5
 Otherwise, assume each question is independent of the others
 There are four present value tables appended to this exam in case you need to do time value of
money computations
 With 180 minutes to do 40 questions, you should budget your time carefully and not spend
more than 4 minutes on a question. If you do, you risk not finishing the exam. A good exam
strategy is to attempt the easiest questions first.
5. Exam Strategy
 Careful budgeting of time on an accounting exam is essential. Bring a watch and check your
progress regularly. Poor time management is the most common reason for poor exam
performance in accounting.
 It is always a good idea to attempt the questions you deem easiest first. In an interrupted exam
that is not restarted, your exam will be scored based on questions attempted.
 It is essential to transfer your answers to the mark sense sheet after each question in case the
exam is interrupted by fire alarm.
 The last ten minutes of an exam should be devoted to double checking your transfers. What
you submit is what is graded. If you have not transferred your answers to the mark sense sheet
at the end of the exam, the invigilator will not wait. Your answer sheet will be seized and it
will be graded based on whatever questions have choices filled in.
 Remember there is no penalty for guessing on a multiple choice computer graded exam.
Submit a choice for every question. Also note that in 2500, choice “(E) None of the above”
does indeed represent a frequent correct choice to questions.

6. Exam room regulations:
 All personal belongings either on the floor or at the front of the exam room. All items on your
desk will be examined by invigilators
 Bring appropriate ID as proof of registration. You will be required to sign in and show
appropriate documentation. Students without ID will be allowed to write the exam, but will be
photographed and asked to submit registration and photo ID to the School of Administrative
Studies the next day.
 No student may leave the exam in the first hour. No student may start the exam after an hour.
Students requiring restroom visits must be accompanied by an invigilator.
 The proctors will announce when there are 15 minutes remaining and any answers not
transferred should be recorded at this time. No one is to leave their seat in the last 15 minutes.
 When time is called, the proctors will go down the rows collecting your answer sheets and
this exam paper. They will not wait and they will not accept your sheet once they have
passed. Any violation of this protocol will result in a grade of zero recorded for the exam.

7. Fire Alarms
 A frequent occurrence in York exams. In the event of a fire alarm, you are to leave your exam
and answer sheet face down on your desk and immediately proceed outside with coats and all
personal belongings. Print your surname on the back of the exam so you know which seat to
return to. An invigilator will lead the group outside to a place of safety. There is to be no
talking during the evacuation or outside. Most rooms are cleared within 30 minutes of the
alarm so that exams can recommence. You will be told after this time whether to reenter the
room and recommence the exam or to go home.

8. Academic Dishonesty
 You are reminded that cheating is a serious offense which can result in expulsion from
university
 Exams at York are held in regular classrooms, which may involve tiered seating.
Consequently, neck exercises are not allowed during exams. First instance of wandering eyes
has the student relocated to the front of the room. Second instance results in seizure of paper.

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Use the following data to answer Questions 1 to 5

Mary Duval has just received the bank statement and realized that this month like in every other month
she would need to perform a bank reconciliation for the company she works for.
Repeating the procedure set by the controller she gathered the relevant data and organized it as follows:

Jan 31st Balance per Bank $ 7,000
add: Deposits in Transit $ 1,540
deduct: Outstanding
Cheques $ (1,925)
Balance per Books $ 6,615

Feb 28th Month of July data per bank per books
Balance Feb 28th $ 8,565 $ 10,035
Deposits $ 5,000 $ 5,910
Cheques $ 4,100 $ 3,200
Note collected $ 900
Bank service charge $ 15
NSF cheque $ 250
Auto withdrawals $ 680

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1) The dollar amount of deposits in transit at February 28th is:
A) 5,910
B) 5,000
C) 3,460
D) 2,450
E) None of the above

2) The dollar amount of outstanding cheques at February 28th is:
A) 4,100
B) 2,175
C) 1,100
D) 1,025
E) None of the above

3) The unadjusted balance of the Bank account at February 28th is:
A) 10,035
B) 9,990
C) 9,900
D) 8,565
E) None of the above

4) The adjusted balance of the Bank account at February 28th is:
A) 10,035
B) 9,990
C) 9,900
D) 8,565
E) None of the above

5) Which of the following adjustments to the book balance was made at February 28th?
A) Deduct (less) Auto withdrawals $680
B) Deduct (less) Notes collected $900
C) Add NSF cheques $250
D) Add Service Charges $15
E) None of the above

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Use the following data to answer Questions 6 to 10

Chocolate Corner Company had the following transactions during the current year:
Apr. 8. Received a $7,200, 75-day, 8% note from Lance Armstrong in payment of account.
May 24.Wrote off customer Joe Nutella's account against the Allowance for Uncollectible Accounts,
$575
June 22. Received payment of Lance Armstrong's note in full.
Sept. 10.Gave a $5,600, 90-day, 9% note to Herbert Anson in payment of account.
Sept.18. Received payment of Joe Nutella's account, written off May 24.
Dec 9. Paid principal and interest due on note to Herbert Anson.

Please Note: a 360-day year is standard for many such interest computations - for this course interest is
to the nearest month rather than precisely to the day. Round interest to the nearest dollar (no cents).
If needed record the above transactions in general journal form.

6) The balance of Accounts Receivable at April 10th is:
A) 7,200
B) 7,050
C) 575
D) 150
E) None of the above

7) The balance of Notes Payable at September 11th is:
A) 5,754
B) 5,600
C) 5,446
D) 154
E) None of the above

8) The journal entry on May 24th has the following:
A) Cr. Notes Receivables – Joe Nutella $575
B) Dr Accounts Receivables – Joe Nutella $575
C) Cr. Allowance for Uncollectible Accounts $575
D) Dr. Allowance for Uncollectible Accounts $575
E) None of the above

9) On June 22nd cash is received in the amount of:
A) 7,350
B) 7,320
C) 7,050
D) 7,080
E) None of the above

10) The journal entries on Sep 18th have the following:
A) Dr. Notes Receivables – J. Nut $575
B) Cr Cash $575
C) Dr. Allowance for Uncollectible Accounts $575
D) Cr. Allowance for Uncollectible Accounts $575
E) None of the above

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Use the following data to answer Questions 11 and 12

At December 31 of the current year, the Sheridan Nurseries Company had a balance of $160,000 in its
Accounts Receivable account and a credit balance of $1,700 in its Allowance for Uncollectible Accounts.
The Accounts Receivable subsidiary ledger consisted of $161,500 in debit balances and $1,500 in credit
balances. The following schedule shows the company's analysis of Accounts Receivable balances at
December 31, and the percentages of each age group that have proven uncollectible in the past.

Amount Percent Doubtful
Current $133,000 1
0-60 Days Past Due 15,000 5
61-180 Days Past Due 8,000 15
Over Six Months Past Due 4,500 40
Total Past Due $160,500

Note: if needed prepare the adjusting journal entry to record the provision for credit losses for the year.

11) The adjustment to the Allowance for Uncollectible Accounts at Dec 31st is:
A) 5,080
B) 3,390
C) 3,380
D) 0
E) None of the above

12) The balance of the account Allowance for Uncollectible Accounts at Dec 31st is:
A) 5,090
B) 3,390
C) 1,700
D) 0
E) None of the above

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13) Your grandparents propose to give you $4,000 for a road trip to the West Coast upon your
successful completion of your degree at York University 3 years from now. They will fund the trip by
investing a sum of money now at 6% compounded semiannually. How much do your grandparents need
to invest today in order to give you $4,000 to fund your road trip 3 years from now?
A) $2,820.00
B) $3,350.00
C) $3,358.40
D) $3,660.40
E) None of the above

14) You have to repay Atkins Bank $60,000 which you have borrowed today, plus 10% in four equal
payments at the end of the next four years. How much is each payment?
A) $40,980.81
B) $12,928.25
C) $18,928.04
D) $19,754.39
E) None of the above

15) A friend would like to return to school full time beginning in four years. Your friend will need
$2,000 per quarter (3 months period) for each of the four years beginning in four years. How much
should your friend invest for each of the next four years at 8% compounded quarterly?
A) $1,061
B) $1,456
C) $5,828
D) $5,880
E) None of the above

Use the following data to answer questions 16 to 19

Expanding Corporation financed a $700,000 expansion by mortgaging their head office building for
seven years. They negotiated a rate of 8% per annum. They will make equal annual payments at the end
of the year.
Note: if needed, complete the amortization table for the mortgage using the effective interest method

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Rate:

Year Payment Interest Principal Balance

$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $

16) What will the annual payments be, assuming payments are made annually at the end of the year?
A) $134,450
B) $143,784
C) $100,000
D) Incomplete data, cannot be answered
E) None of the above

17) What is the amount of the principal payment in Year 6
A) $124,496
B) $118,830
C) $115,269
D) $106,730
E) None of the above

18) How much is the interest expense in Year 3?
A) $54,505
B) $49,724
C) $45,578
D) $42,946
E) None of the above

19) What should be reported as the Mortgage liability on the balance sheet for Year 1?
A) $565,550
B) $621,550
C) $626,216
D) $700,000
E) None of the above

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Use the following information to answer questions 20 to 25 (Round to 2 decimal places)

The following information has been extracted from the records of Due North Sales (DNS) Co.:
January 1 Beginning Inventory 550 units @ $25 each
January 9 Bought 1,000 units @ $28 each
January 15 Sold 1,200 units @ $40 each
January 25 Bought 800 units @ $30 each

20) If Due North Sales (DNS) uses the Weighted Average cost flow assumption, under a periodic
method, the ending inventory value at January 31st is
A) $30,550
B) $32,750
C) $32,176
D) $33,800
E) None of the above

21) If Due North Sales (DNS) uses the FIFO cost flow assumption, under a periodic method, the ending
inventory value at January 31st is
A) $30,550
B) $32,750
C) $33,427
D) $33,800
E) None of the above

22) If Due North Sales (DNS) uses the LIFO cost flow assumption, under a perpetual method, the ending
inventory value at January 31st is
A) $30,550
B) $32,750
C) $33,427
D) $33,800
E) None of the above

23) If Due North Sales (DNS) uses the Weighted Average cost flow assumption, under a perpetual
method, the cost of goods sold for January, is
A) $35,200
B) $31,950
C) $32,748
D) $32,323
E) None of the above

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24) If Due North Sales (DNS) uses the FIFO cost flow assumption, under a perpetual method, the cost of
goods sold for January, is
A) $35,200
B) $31,950
C) $32,748
D) $32,323
E) None of the above

25) If Due North Sales (DNS) uses the LIFO cost flow assumption, under a periodic method, the cost of
goods sold for January, is
A) $35,200
B) $31,950
C) $32,748
D) $32,323
E) None of the above

Use the following data to answer questions 26 to 27

Lakeside Company has a used executive charter plane that originally cost $590,000. Straight-line
depreciation on the plane has been recorded for three years, with a $90,000 expected salvage value at
the end of its estimated five-year useful life. The last depreciation entry was made at the end of the third
year. Six months into the fourth year, Lakeside disposes of the plane.

26) If the plane was sold for cash at its book value, the cash received was:
A) $240,000
B) $290,000
C) $340,000
D) $500,000
E) None of the above

27) If the plane was sold for $220,000 cash, the gain or loss on sale of plant asset was:
A) Gain $10,000
B) Gain $20,000
C) Loss $10,000
D) Loss $20,000
E) None of the above

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