Financial Accounting

For MBAs, MSMs, et al.

ACG 5005
Instructor: Professor Paul E. Madsen
Final Exam Question Format
The format will be like the quizzes and
midterm.
You could see multiple choice, short answer,
matching vocabulary, horizontal accounting
model entries, journal entries, or accounting
math (like depreciation or COGS and ending
inventory).



What Could Be On the Final Exam
The fundamentals (half of the final exam will cover this stuff)
Routine HAM entries:
Receiving contributed capital, receiving salary revenue when you pass go, purchasing a property
with cash, receiving rent revenue, paying rent expense, receiving miscellaneous revenue, paying
miscellaneous expense, paying prepaid income taxes, taking out a mortgage loan on a Monopoly
property.
HAM adjusting entries:
Salary adjusting entries and their resolution when you pass go and receive cash for salary,
interest adjusting entries and their resolution when you actually pay the interest using cash in
the future,
Journal entries
Know how to record all of the routine HAM entries above and all of the HAM adjusting
entries above in both HAM and journal entry format.
Vocabulary (know definitions and which financial statement(s) any accounts belong to)
Adjusting entries, Allowance for doubtful accounts, Assets, Audit, Bad debt expense, Balance
sheet, Book value, Capitalize, Cash flow statement, Common stock, Conservatism, Contingent
liability, Contra account, Cost flow assumptions, Cost of goods sold, Defined benefit, Defined
contribution, Depreciation, Dividend, Earnings, Expenses, Face value, Financing activities, Gains,
General journal, General ledger, General purpose financial statements, Goodwill, Income, Income
statement, Intangible assets, Interest, Inventory, Investing activities, Lease, Liability, Liquidity,
Losses, Matching concept, Materiality, Operating activities, Other post-retirement benefits,
Payables, Present value, Receivables, Retained earnings, Revenue, Salvage value, Selling and
administrative costs, Shrinkage, Solvency, Transaction, Unearned revenue, Useful life, Write-
down.





What Could Be On the Final Exam
The non-fundamental, but still really important stuff (half of the final exam will
cover this stuff)
Complex HAM entries:
Trading Monopoly properties or RRUs.
Complex HAM adjusting entries
Income tax adjusting entries with or without prepaid taxes and their resolution when you pay
taxes in April, writing down monopoly properties or RRUs, depreciating Monopoly houses.
Accounting calculations and reasoning
Recording a sale for a company using a perpetual inventory system or a periodic inventory
system.
Inventory calculations to estimate cost of goods sold (COGS) and ending inventory using specific
identification, FIFO, LIFO, or average cost.
Estimating bad debt expense and allowance for doubtful accounts using the percent of sales or
percent of accounts receivables methods.
Capitalizing and depreciating a long-term asset using the straight-line or units of production
methods. Calculating depreciation when there is a change in one of your estimates. Selling long-
term assets, which may have been previously depreciated.
Properly forecasting the cash flows associated with a bond. You will be given the bonds face
value, payment frequency, coupon rate, and maturity date.
Calculating the present value of a single future cash flow or a series of future cash flows.
Journal entries
For the complex HAM entries and complex HAM adjusting entries listed above.
For sales when using either a perpetual or periodic inventory system.
Recording bad debt expense as an adjusting entry and using the allowance for doubtful accounts
account to write off bad debts.
Capitalizing and depreciation long-term assets.





Some Sample Questions
What follows are some sample questions.
The are intended to help you identify gaps in your knowledge
to help you determine what to study.
This is NOT a final exam preview meaning I am NOT giving
you all of the final exam questions early.
So dont come to my office and complain that I put something on
the exam that was not included in the sample questions.
In other words, you need to know more than is tested in the sample
questions. The sample questions should be considered a random
sample of questions that could be asked on the final exam, NOT an
exhaustive list of everything I could possibly ask on the final exam.
I reserve the right to include questions about anything that has been
covered in my class.
You should expect to see primarily questions about the stuff on the
what could be on the final exam slides (slides 3 and 4).
Sample Questions
The Fundamentals
Routine HAM entries
Make the HAM entry for a Monopoly company
that receives a contribution of $1,500 of capital
in exchange for ownership shares.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 +C 1500 = +CC 1500 +FA 1500 = +NCF 1500

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Cash
Contributed Capital
1500
1500

Make the HAM entry for a Monopoly company
that receives a contribution of $1,500 of capital
in exchange for ownership shares.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 +C 1500 = +CC 1500 No entry +FA 1500 = +NCF 1500

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Cash
Contributed Capital
1500
1500

Make the HAM entry for a Monopoly company
that purchases a railroad for $200 cash.




Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 -C 200 +RRU 200 = 0 -IA 200 = -NCF 200

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Railroads and Utilities
Cash
200
200

Make the HAM entry for a Monopoly company
that purchases a railroad for $200 cash.




Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 -C 200 +RRU 200 No entry -IA 200 = -NCF 200

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Railroads and utilities (RRU)
Cash
200
200

Make the HAM entry for a Monopoly company
that receives $200 salary in cash for passing
Go.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 +C 200 = +RE 200 +SRev 200 = +NI 200 +OA 200 = +NCF 200

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Cash
Salary Revenue
200
200

Make the HAM entry for a Monopoly company
that receives $200 salary in cash for passing
Go.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 +C 200 = +RE 200 +SRev 200 = +NI 200 +OA 200 = +NCF 200

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Cash
Salary Revenue
200
200

Make the HAM entry for a Monopoly company
that pays $50 in rent with cash to another
company.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 -C 50 = -RE 50 -RExp 50 = -NI 50 -OA 50 = -NCF 50

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Rent Expense
Cash
50
50

Make the HAM entry for a Monopoly company
that pays $50 in rent with cash to another
company.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 -C 50 = -RE 50 -RExp 50 = +NI 50 -OA 50 = -NCF 50

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Rent Expense
Cash
50
50

Make the HAM entry for a Monopoly company
that borrows $100 from the bank in the form of
a mortgage loan.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 +C 100 = +MP 100 +FA 100 = +NCF 100

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Cash
Mortgage Payable
100
100

Make the HAM entry for a Monopoly company
that borrows $100 from the bank in the form of
a mortgage loan.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
1/01 +C 100 = +MP 100 No entry +FA 100 = +NCF 100

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
1/2001 Cash
Mortgages Payable
100
100

Sample Questions
The Fundamentals
HAM adjusting entries
Make the HAM adjusting entry for a Monopoly
company that has ended the year on side 3 of
the board and has earned half of a $200 salary
payment.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 +Rec 100 = +RE 100 +SRev 100 = +NI 100

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/2001 Salary Receivable
Salary Revenue
100
100

Make the HAM adjusting entry for a Monopoly
company that has ended the year on side 3 of
the board and has earned half of a $200 salary
payment.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 +Rec 100 = +RE 100 +SRev 100 = +NI 100 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/2001 Receivables (Salary Receivable)
Salary Revenue
100
100

As an adjusting entry on 12/2001, a Monopoly
company recognized $100 of salary revenue
because it was halfway around the board. On
2/2002, the firm passed Go. Make the HAM
entry to record the event on 2/2002



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
2/02 +C 200 Rec 100 =
+RE 100
+Srev 100 = +NI 100 +OA 200 = +NCF 200

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
2/2002 Cash
Salary Receivable
Salary Revenue
200



100
100
As an adjusting entry on 12/2001, a Monopoly
company recognized $100 of salary revenue
because it was halfway around the board. On
2/2002, the firm passed Go. Make the HAM
entry to record the event on 2/2002



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
2/02
+C 200 Rec 100 = +RE 100 +SRev 100 = +NI 100
+OA 200 = +NCF 200

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
2/2002 Cash
Receivables (salary receivable)
Salary Revenue
200
100
100
A Monopoly company borrowed $100 in the
form of a mortgage loan during 8/2001. The
lender charges 12% interest per year. Make the
HAM adjusting entry needed at the end of year
1 related to this loan.


Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
0= +IP 5 RE 5 -Iexp 5 = -NI 5

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
Interest Expense
Interest Payable
5
5

A Monopoly company borrowed $100 in the
form of a mortgage loan during 8/2001. The
lender charges 12% interest per year. Make the
HAM adjusting entry needed at the end of year
1 related to this loan.


Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
0 = +IP 5 RE 5 -IExp 5 = -NI 5 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
Interest Expense
Interest Payable
5
5

A Monopoly company has a $10 balance in the
interest payable account. On 2/2002 it uses cash
to pay off its interest obligation with the bank.
Make the HAM entry to record this transaction.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
2/2002 -C 10 = -IP 10 -OA 10 = -NCF 10

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
Interest Payable
Cash
10
10

A Monopoly company has a $10 balance in the
interest payable account. On 2/2002 it uses cash
to pay off its interest obligation with the bank.
Make the HAM entry to record this transaction.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
2/2002 -C 10 = -IP 10 No entry -OA 10 = -NCF 10

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
2/2002 Interest Payable
Cash
10
10

Sample Questions
The Fundamentals
Vocabulary
Im not going to give you vocabulary sample
questions.
To study the vocabulary, go through the list on
slide 3 and be sure you know what each word
means, and, if it is an account, which financial
statement(s) it belongs to.
If you dont know one, look it up in the
textbooks glossary or on wikipedia or
investopedia.
Sample Questions
Non-fundamental, but still important stuff
Complex HAM entries
Monopoly company A agrees to trade $500 cash plus Ventnor Ave. to
company B in exchange for Boardwalk. The book value of Ventnor on As
books is $150 and A estimates its fair value is $300. Company A estimates the
fair value of Boardwalk to be $900. The book value of Boardwalk on Company
Bs books is $400 and company B estimates its fair value is $600. Company B
estimates the fair value of Ventnor is $250.

Make the required for company A to record this trade in both HAM and
journal entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
-C 500 P 150 +P 900 =
+RE 250
+G 250 = +NI 250 -IA 500 = -NCF 500

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
Property
Cash
Gain
750
500
250


Monopoly company A agrees to trade $500 cash plus Ventnor Ave. to
company B in exchange for Boardwalk. The book value of Ventnor on As
books is $150 and A estimates its fair value is $300. Company A estimates the
fair value of Boardwalk to be $900. The book value of Boardwalk on Company
Bs books is $400 and company B estimates its fair value is $600. Company B
estimates the fair value of Ventnor is $250.

Make the required for company A to record this trade in both HAM and
journal entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
-C 500 +P 750 = +RE 250 +G 250 = +NI 250 -IA 500 = -NCF 500

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
Property (Boardwalk)
Gain
Property (Ventnor)
Cash
900


250
150
500
Monopoly company A agrees to trade $500 cash plus Ventnor Ave. to
company B in exchange for Boardwalk. The book value of Ventnor on As
books is $150 and A estimates its fair value is $300. Company A estimates the
fair value of Boardwalk to be $900. The book value of Boardwalk on Company
Bs books is $400 and company B estimates its fair value is $600. Company B
estimates the fair value of Ventnor is $250.

Make the required entries for company B to record this trade in both HAM
and journal entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
+C 500 P 400 +P 250 =
+RE 350
+G 350 = +NI 350 +IA 500 = +NCF 500

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
Cash
Property
Gain

500
150
350


Monopoly company A agrees to trade $500 cash plus Ventnor Ave. to
company B in exchange for Boardwalk. The book value of Ventnor on As
books is $150 and A estimates its fair value is $300. Company A estimates the
fair value of Boardwalk to be $900. The book value of Boardwalk on Company
Bs books is $400 and company B estimates its fair value is $600. Company B
estimates the fair value of Ventnor is $250.

Make the required entries for company B to record this trade in both HAM
and journal entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
+C 500 -P 150 = +RE 350 +G 350 = +NI 350 +IA 500 = +NCF 500

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
Cash
Property (Ventnor)
Property (Boardwalk)
Gain
500
250


400
350
Sample Questions
Non-fundamental, but still important stuff
Complex HAM adjusting entries
At year end, a Monopoly company has a $200
balance in the prepaid taxes account and owes
income taxes of $100. Make the HAM adjusting
entry to record income taxes.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 +Rec 100 -PpdT 200 = -RE
100
-ITExp 100 = -NI
100

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/02 Tax Refund Receivable
Income Tax Expense
Prepaid Tax
100
100


200
At year end, a Monopoly company has a $200
balance in the prepaid taxes account and owes
income taxes of $100. Make the HAM adjusting
entry to record income taxes.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 +Rec 100 -Ppdt 200 = -RE 100 -ITexp 100 = -NI 100 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/02 Receivables (tax refund receivable)
Income Tax Expense
Prepaid Taxes
100
100


200
At the end of year 1, a Monopoly company made
the following entry to record income taxes.


Make the entries to properly record this firms
transaction with the tax authorities in April of
year 2 (when cash will actually change hands) in
both HAM and journal entry format.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 +Rec 100 -Ppdt 200 = -RE 100 -ITexp 100 = -NI 100 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
4/02 Cash
Tax Refund Receivable
100
100


Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
4/02 +C 100 Rec 100 = 0 +OA 100 = +NCF 100
At the end of year 1, a Monopoly company made
the following entry to record income taxes.


Make the entries to properly record this firms
transaction with the tax authorities in April of
year 2 (when cash will actually change hands) in
both HAM and journal entry format.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 +Rec 100 -Ppdt 200 = -RE 100 -ITexp 100 = -NI 100 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
4/02 Cash
Receivables (income tax receivable)
100


100


Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
4/02 +C 100 -Rec. 100 No entry +OA 100 = +NCF 100
At year end, a Monopoly company has a $200
balance in the prepaid taxes account and owes
income taxes of $300. Make the HAM adjusting
entry to record income taxes.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 -PpdT 200 = +TP 100 RE300 -ITExp 300 = -NI
300

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/02 Income Tax Expense
Prepaid Taxes
Taxes Payable
300
200
100
At year end, a Monopoly company has a $200
balance in the prepaid taxes account and owes
income taxes of $300. Make the HAM adjusting
entry to record income taxes.



Make the journal entry to record this
transaction.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 -Ppdt 200 = +TP 100 -RE 300 -ITexp 300 = -NI 300 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/02 Income Tax Expense
Prepaid Taxes
Taxes Payable
300


200
100
At the end of year 1, a Monopoly company made
the following entry to record income taxes.


Make the entries to properly record this firms
transaction with the tax authorities in April of
year 2 (when cash will actually change hands) in
both HAM and journal entry formats.

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
4/02 Taxes Payable
Cash
100
100


Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
4/02 -C 100 = -TP 100 -OA 100 = -NCF 100

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 -Ppdt 200 = +TP 100 -RE 300 -ITexp 300 = -NI 300 No entry
At the end of year 1, a Monopoly company made
the following entry to record income taxes.


Make the entries to properly record this firms
transaction with the tax authorities in April of
year 2 (when cash will actually change hands) in
both HAM and journal entry formats.

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
4/02 Taxes Payable
Cash
100
100


Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
4/02 -C 100 = -TP 100 No entry -OA 100 = -NCF 100

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/01 -Ppdt 200 = +TP 100 -RE 300 -ITexp 300 = -NI 300 No entry
Sample Questions
Non-fundamental, but still important stuff
Accounting Calculations and Reasoning
On February 5
th
, Kirk Co. makes a sale, receiving $100
of cash and delivering goods to the customer which
cost Kirk Co. $80 to produce. Assuming Kirk Co. uses a
periodic inventory system, make the appropriate
entries for Kirk Co. to record the sale in both HAM and
journal entry formats.



Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
2/5 +C 100 = +RE 100 +Rev 100 = +NI 100 +OA 100 = +NCF 100

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
2/5 Cash
Sales Revenue
100
100

On February 5
th
, Kirk Co. makes a sale, receiving $100
of cash and delivering goods to the customer which
cost Kirk Co. $80 to produce. Assuming Kirk Co. uses a
periodic inventory system, make the appropriate
entries for Kirk Co. to record the sale in both HAM and
journal entry formats.



Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
2/5 +C 100 = +RE 100 +SalesRev 100 = +NI 100 +OA 100 = +NCF 100

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
2/5 Cash
Sales Revenue
100
100

On February 5
th
, Kirk Co. makes a sale, receiving $100
of cash and delivering goods to the customer which
cost Kirk Co. $80 to produce. Assuming Kirk Co. uses a
perpetual inventory system, make appropriate entries
for Kirk Co. to record the sale in both HAM and journal
entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
2/5 +C 100 Inv 80 = +RE 20 +Rev 100 CoGS 80 = +NI
20
+OA 100 = +NCF 100

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
2/5 Cash
Cost of Goods Sold
Inventory
Sales Revenue
100
80


80
100
On February 5
th
, Kirk Co. makes a sale, receiving $100
of cash and delivering goods to the customer which
cost Kirk Co. $80 to produce. Assuming Kirk Co. uses a
perpetual inventory system, make appropriate entries
for Kirk Co. to record the sale in both HAM and journal
entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
2/5 +C 100 = +RE 100 +SalesRev 100 = +NI 100 +OA 100 = +NCF 100
2/5 -Inventory 80 = -RE 80 -COGS 80 = -NI 80 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
2/5 Cash
Sales Revenue
Cost of goods sold (COGS)
Inventory
100

80

100

80
Rupar Co. is a business that sells bottled wines. At the beginning
of January, Rupar has no bottles in inventory. During January,
Rupar Co. purchased four bottles of wine at the following dates
and prices.
1. Jan. 5: 1 bottle for $30
2. Jan. 10: 1 bottle for $40
3. Jan. 12: 1 bottle for $56
4. Jan. 15: 1 bottle for $60

Assume that Rupar Co. sold 3 bottles during January. Please
calculate Rupar Co.s January COGS and ending inventory using
FIFO and LIFO.

Rupar Co. is a business that sells bottled wines. At the beginning
of January, Rupar has no bottles in inventory. During January,
Rupar Co. purchased four bottles of wine at the following dates
and prices.
1. Jan. 5: 1 bottle for $30
2. Jan. 10: 1 bottle for $40
3. Jan. 12: 1 bottle for $56
4. Jan. 15: 1 bottle for $60

Assume that Rupar Co. sold 3 bottles during January. Please
calculate Rupar Co.s January COGS and ending inventory using
FIFO and LIFO.

FIFO: COGS = 30 + 40 + 56 = $126 EI = $60
LIFO: COGS = 60 + 56 + 40 = $156 EI = $30
During 2012, Reppenhagen Co. had credit sales (sales on
account) of $1,000. At the end of 2012, Reppenhagen Co. had a
balance in its allowance for doubtful accounts equal to $10.
Reppenhagen Co. estimates that it will be unable to collect 5% of
its 2012 credit sales. Percentage of sales = get Bad Debt Expense
right

Please make the appropriate year-end adjusting entries relating
to uncollectible accounts receivable for Reppenhagen Co. in
2012 using both HAM and journal entry formats. Assume
Reppenhagen Co. uses the percentage of sales method.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/12 -Allowance 50 = -RE 50 -BadDebtExp 50 = -NI 50

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/12 Bad Debt Expense
Allowance for doubtful accts
50
50
During 2012, Reppenhagen Co. had credit sales (sales on
account) of $1,000. At the end of 2012, Reppenhagen Co. had a
balance in its allowance for doubtful accounts equal to $10.
Reppenhagen Co. estimates that it will be unable to collect 5% of
its 2012 credit sales.
Please make the appropriate year-end adjusting entries relating
to uncollectible accounts receivable for Reppenhagen Co. in
2012 using both HAM and journal entry formats. Assume
Reppenhagen Co. uses the percentage of sales method.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/12 -Allow. for DA 50 = -NI 50 -BadDebtExp 50 = -NI 50 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/12 Bad Debt Expense
Allowance for doubtful accounts
50
50
At the end of 2012, Reppenhagen Co. had accounts receivable of $500 and a
balance in its allowance for doubtful accounts equal to $10. Reppenhagen Co.
estimates that it will be unable to collect 10% of its accounts receivable.

Percentage of sales = get Allowance for d.a. right

Please make the appropriate year-end adjusting entries relating to
uncollectible accounts receivable for Reppenhagen Co. in 2012 using both HAM
and journal entry formats. Assume Reppenhagen Co. uses the percentage of
accounts receivable method.

Keep in mind that our goal when using the percentage of accounting receivable
method is to get the balance in allowance for doubtful accounts right. Our
estimate of the appropriate balance is $50 and the pre-adjustment balance is
$10. So we need to put an additional $40 into the allowance account.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/12 - Allowance 40 = -RE 40 -BadDebtExp 40 = -NI 40

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/12 Bad Debt Expense
Allowance for d.a.
40
40
At the end of 2012, Reppenhagen Co. had accounts receivable of $500 and a
balance in its allowance for doubtful accounts equal to $10. Reppenhagen Co.
estimates that it will be unable to collect 10% of its accounts receivable.

Please make the appropriate year-end adjusting entries relating to
uncollectible accounts receivable for Reppenhagen Co. in 2012 using both HAM
and journal entry formats. Assume Reppenhagen Co. uses the percentage of
accounts receivable method.
Keep in mind that our goal when using the percentage of accounting receivable
method is to get the balance in allowance for doubtful accounts right. Our
estimate of the appropriate balance is $50 and the pre-adjustment balance is
$10. So we need to put an additional $40 into the allowance account.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/12 -Allow. for DA 40 = -NI 40 -BadDebtExp 40 = -NI 40 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/12 Bad Debt Expense
Allowance for doubtful accounts
40
40
Reppenhagen Co. is a company that occasionally makes credit
sales. It knows that it will be unable to collect all of its accounts
receivable and makes appropriate year-end adjusting entries
relating to its uncollectible accounts receivable.

Assume that on May 5
th
, Reppenhagen Co. determines that it will
be unable to collect a $10 accounts receivable for a prior sale to X
Co. Make the appropriate entries to record the event on May 5
th
in both HAM and journal entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
5/5 -A/R 10 +Allowance 10 = 0

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
5/5 Allowance for d.a.
Accounts Receivable
10
10
Reppenhagen Co. is a company that occasionally makes credit
sales. It knows that it will be unable to collect all of its accounts
receivable and makes appropriate year-end adjusting entries
relating to its uncollectible accounts receivable.

Assume that on May 5
th
, Reppenhagen Co. determines that it will
be unable to collect a $10 accounts receivable for a prior sale to X
Co. Make the appropriate entries to record the event on May 5
th
in both HAM and journal entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
5/5 -AR (X Co.) 10 + Allow for D.A. 10 No entry No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
5/5 Allowance for doubtful accounts
Accounts Receivable (X Co.)
10
10
Vincent Co. purchased a machine for its factory on July 12
th
. The cost of
the machine was $200, shipping to get it to the factory was $10, the
cost of installing it on the factory floor was $20, and the cost of heating
and cooling the factory while the machine was being installed was $20.
All of these expenditures were paid with cash.

Make the appropriate entries to capitalize the machine in both HAM
and journal entry formats.


Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
7/12 -C 230 +Machine 230 = 0 -IA 230 = -NCF 230

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
7/12 Machine
Cash
230
230
Vincent Co. purchased a machine for its factory on July 12
th
. The cost of
the machine was $200, shipping to get it to the factory was $10, the
cost of installing it on the factory floor was $20, and the cost of heating
and cooling the factory while the machine was being installed was $20.
All of these expenditures were paid with cash.

Make the appropriate entries to capitalize the machine in both HAM
and journal entry formats.

The key is to capitalize the appropriate costs related to the installation
of the machine, but ignore the period costs (utilities).

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
7/12 -C 230 +Machine 230 No entry -IA 230 = -NCF 230

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
7/12 Machine
Cash
230
230
Imagine that Vincent Co. purchased and capitalized a $500
machine on August 1
st
2012. Vincent Co. estimates that the
machine will have a useful life of 5 years and a salvage value of
$250.

Make the appropriate entries to record the expense associated
with using up the machines capitalized value at year end on
December 31
st
2012 using the straight-line method. Use both
HAM and journal entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/12 -AD 20.83 = -RE 20.83
-Dexp 20.83 = -NI 20.83

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/12 Depreciation Expense
Accumulated Depreciation
20.83
20.83
Imagine that Vincent Co. purchased and capitalized a $500
machine on August 1
st
2012. Vincent Co. estimates that the
machine will have a useful life of 5 years and a salvage value of
$250.

Make the appropriate entries to record the expense associated
with using up the machines capitalized value at year end on
December 31
st
2012 using the straight-line method. Use both
HAM and journal entry formats.

Date
Balance Sheet
A = L + SE
Income Statement
R E = NI
Cash Flow Statement
OA + IA + FA = NCF
12/12 -AD 50 = -RE 50 -DExp 50 = -NI 50 No entry

Date
Account you debit (left aligned)
Account you credit (centered) Debit Credit
12/12 Depreciation Expense
Accumulated Depreciation (machine)
50
50
List the timing and dollar amounts of cash flows paid by a bond with the
following characteristics.
Face value = $1,000
Coupon rate (annual) = 10%
Market rate (annual) = 8%
Payment frequency = semiannual
Maturity = 2 years


List the timing and dollar amounts of cash flows paid by a bond with the
following characteristics.
Face value = $1,000
Coupon rate (annual) = 10%
Market rate (annual) = 8%
Payment frequency = semiannual
Maturity = 2 years


+.5 years: $50
+ 1 year: $50
+ 1.5 years: $50
+ 2 years: $1,050
Write the formula for used to calculate
the present value of a future cash flow.



Write the formula for used to calculate
the present value of a future cash flow.

PV = FV / (1 + i ) ^ n