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San Jose State University

Fundamentals of Accounting

Professor William F. OBrien


Fall 2014

SAN JOSE STATE UNIVERSITY


COLLEGE OF BUSINESS
ACCOUNTING FUNDAMENTALSMBA 220
FALL 2014
MID-TERM #2 (take home examination)
Professor William F. OBrien
NAME:_____________________________________
DATE:__________________________
Instructions:
1. This exam is to be typewritten (except for calculations).
2. Show all of your work and present it in a clear and LEGIBLE manner.
3. Please complete the final demographic question.
4. This exam is due in class on 11/19
5. NO COLLABORATION or the use of tutors is permitted on this exam.
Scoring Summary:
Question 1

__________

(12 points)

Question 2

__________

(20 points)

Question 3

__________

(24 points)

Question 4

__________

(20 points)

Question 5

__________

(15 points)

Question 6

__________

(9 points)

Prelim. Score __________


Curve Adj.

__________

Final Score

==============

Accounting FundamentalsMBA 213B


Fall 2014
Mid-term #2November 12, 2014

San Jose State University


Fundamentals of Accounting

1.

Professor William F. OBrien


Fall 2014

Jim Johnson, Jason and Joanne Johnson each purchased a Pentium II,
350mhz personal computer on January 1. The cost of each computer was
$8,000. The economic life expectancy of the computers is four years (ok, so
this is unrealisticbut its just an accounting problem, not reality). During
the current year, they experience identical operating events with the only
difference being that Jim uses the straight-line depreciation method, Jason
uses the double declining balance method and Joanne uses the sum-of-thedigits depreciation method. Both became disenchanted with their computers
during the year due to the introduction of a new generation of Pentiums. On
December 31, each sold their computer for $3,000.
a.

Calculate Jims depreciation expense and gain or loss from the


disposition of his computer for the current year.

b.

Calculate Jasons depreciation expense and gain or loss from the


disposition of her computer for the current year

c.

Calculate Joannes depreciation expense and gain or loss from the


disposition of her computer for the current year

Accounting FundamentalsMBA 213B


Fall 2014
Mid-term #2November 12, 2014

San Jose State University


Fundamentals of Accounting

Professor William F. OBrien


Fall 2014

2. Describe the statement of cash flows to an engineering friend of yours.


Discuss the differences between the direct and indirect methods of
presenting cash from operating activities. Explain how this statement can
be used to improve the performance of a company. Do not use accounting
jargon.
.

Accounting FundamentalsMBA 213B


Fall 2014
Mid-term #2November 12, 2014

San Jose State University


Fundamentals of Accounting

Professor William F. OBrien


Fall 2014

(a) What is the modified goal of a for-profit business?

(b) How did Alex Rogo change in terms of the How and the What
that we discussed earlier in this course?

Accounting FundamentalsMBA 213B


Fall 2014
Mid-term #2November 12, 2014

San Jose State University


Fundamentals of Accounting

Professor William F. OBrien


Fall 2014

(c) Evaluate Lous ethical dilemma regarding the reporting to corporate.


Use real world examples to support your position.

(d) What is your personal Four on the Floor from The Goal?

Accounting FundamentalsMBA 213B


Fall 2014
Mid-term #2November 12, 2014

San Jose State University


Fundamentals of Accounting

Professor William F. OBrien


Fall 2014

3. Almaden Homeowners Association issued 500 5-year bonds on July 1,


1997. The interest payments are made semiannually (December 31 and
June 30) at an annual rate of 8 percent. The effective interest rate on the
bonds is 10 percent. The face value of each bond is $1,000. The first
interest payment is December 31, 1997.
a. What is the issue price of the 500 bonds?

b. Prepare the issuers bond payment table through June 30, 1998.

Accounting FundamentalsMBA 213B


Fall 2014
Mid-term #2November 12, 2014

San Jose State University


Fundamentals of Accounting

Professor William F. OBrien


Fall 2014

4. The stockholders equity section of Kifer Industries balance sheet


follows:
Common stock: $2.50 par value
Paid-in capital: Excess over par
Paid-in capital: Treasury stock
Retained Earnings
Treasury stock
Total stockholders equity

$60,000
49,800
400
37,600
(3,000)
$144,800

a. Calculate paid-in capital: treasury stock, retained earnings, and


total stockholders equity if all of the treasury stock were sold for
$3,600.

b. Calculate paid-in capital: treasury stock, retained earnings, and


total stockholders equity if all of the treasury stock were sold for
$2,200.

Accounting FundamentalsMBA 213B


Fall 2014
Mid-term #2November 12, 2014

San Jose State University


Fundamentals of Accounting

6.

Professor William F. OBrien


Fall 2014

Demographics:
a.

On a scale of 1-10, with 1 being low and 10 being high, how would you
rate your classroom participation to date?
__________

b.

On a scale of 1-10, with 1 being easy and 10 being high, how would
you rate the difficulty of this examination?
__________

c.

On a scale of 1-10, with 1 being unfair and 10 being fair, how would
you rate the fairness of this examination?
__________

Accounting FundamentalsMBA 213B


Fall 2014
Mid-term #2November 12, 2014