NAME : _____________________________ NPM ; _______________________________

END OF SEMESTER TEST, EVEN SEMESTER - 2016/ 2017

Course : Financial Accounting (Principle Accounting)
Duration : 120 minutes
Date : June 6, 2017
Lectures : Teaching Team
(PROBLEM SHEET MUST BE SUBMITTED ALONG WITH ANSWERING SHEET)
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PART I : TRUE OR FALSE (YOU MUST ALSO WRITE DOWN THE REASON FOR
CHOOSING THE CORRECT ANSWER, OR THE POINT WILL BE ZERO) – 10%

1. Accounts receivable are reported in the statement of financial position at their cash realizable
value which is accounts receivable less bad debt expense accounts.
2. The amount of a cash dividend liability is recorded on the date of record because it is on that
date that the persons or entities who will receive the dividend are identified.
3. An accounts receivable subsidiary ledger has all the detailed information about the cash sales
to individual customers.
4. Goods that have been purchased FOB destination but are in transit, should be excluded from
a physical count of goods.
5. Manufacturing costs that cannot be classified as direct materials or direct labor are classified
as manufacturing overhead.

PART II : MULTIPLE CHOICE ( YOU MUST CROSS THE CORRECT ANSWER ON THIS
PROBLEM SHEET) – 20%

 On October 2, 2015, Adelaide Manufacturing Company established a petty cash fund by issuing
a check for €700 to the custodian of the petty cash fund. On October 31, 2015, the custodian
submitted the following paid petty cash vouchers for replenishment of the petty cash fund when
there is €30 cash in the fund:
Freight-In €290
Supplies Expense 110
Entertainment of clients 178
Postage Expense 100
The journal entry to establish the petty cash fund would
a. debit to petty cash for €700, credit to Cash Over and Short for €700.
b. debit to petty cash for €700, credit to Cash for €700
c. debit to petty cash for €700, credit to Accounts Receivable for €700.
d. debit to cash for €700, credit to petty cash for €700
 Brendan Company lends Lanier Company $60,000 on April 1, accepting a four-month, 9%
interest note. Brendan Company prepares financial statements on April 30. What adjusting entry
should be made before the financial statements can be prepared?
a. Note Receivable 60,000
Cash 60,000
b. Interest Receivable 450
Interest Revenue 450

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 c. Cash 450
Interest Revenue 450
d. Interest Receivable 1,800
Interest Revenue 1,800
 Direct materials and direct labor of a company total $8,000,000. If manufacturing overhead is
$4,000,000, what is direct labor cost?
a. $4,000,000
b. $8,000,000
c. $0
d. Cannot be determined from the information provided
In which journal would a cash purchase of inventory be recorded?
a. Purchases journal
b. General journal
c. Cash payments journal
d. None of these answer choices are correct
 Peebles Company purchased 1,000 shares of its own £5 par value ordinary shares, paying
£14 per share. The shares were originally sold for £9 each. The journal entry to record the
purchase of treasury shares includes a debit to
a. Share Capital–Ordinary for £5,000.
b. Treasury Shares for £14,000.
c. Share Premium–Ordinary for £4,000.
d. Retained Earnings for £5,000.
 If Vickers Company issues 4,000 ordinary shares with a $5 par value for $140,000,
a. Share Capital–Ordinary will be credited for $140,000.
b. Share Premium–Ordinary will be credited for $20,000.
c. Share Premium–Ordinary will be credited for $120,000.
d. Cash will be debited for $120,000.
 Items waiting to be used in production are considered to be
a. raw materials.
b. work in progress.
c. finished goods.
d. merchandise inventory.
 Cost of goods sold is computed from the following equation:
a. beginning inventory – cost of goods purchased + ending inventory.
b. sales – cost of goods purchased + beginning inventory – ending inventory.
c. sales + gross profit – ending inventory + beginning inventory.
d. beginning inventory + cost of goods purchased – ending inventory.
For inventoriable costs to become expenses under the matching principle,
a. the product must be finished and in stock.
b. the product must be expensed based on its percentage-of-completion.
c. the product to which they attach must be sold.
d. all accounts payable must be settled
If a transaction cannot be recorded in a special journal
a. the company must refuse to enter into the transaction.
b. it is recorded in the general journal.
c. it is recorded directly in the accounts in the general ledger.

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 d. it is recorded as an adjustment on the work sheet.

PART III : ESSAYS– 70%

Essay 1 (20%)
Fidget Spinner Manufacturing Company has the following data at June 30, 2017:
Raw materials inventory, June 1 $ 10,000
Work in process inventory, June 1 15,000
Finished goods inventory, June 1 50,200
Total manufacturing costs 300,000
Sales 600,000
Work in process inventory, June 30 30,000
Finished goods inventory, June 30 18,200
Raw materials inventory, June 30 20,000

Instructions
(a) Prepare an income statement through gross profit for the month of June.
(b) Indicate the inventories sheet presentation on the balance sheet as of June 30

Essay 2 (15%)
Milner Boat Company's bank statement for the month of September showed a balance per bank of
$7,000. The company's Cash account in the general ledger had a balance of $5,459 at September 30.
Other information is as follows:
(1) Cash receipts for September 30 recorded on the company's books were $5,200 but this amount
does not appear on the bank statement.
(2) The bank statement shows a debit memorandum for $40 for check printing charges.
(3) Check No. 119 payable to Kohl Company was recorded in the cash payments journal for $248
and cleared the bank for the same amount. A review of the accounts payable subsidiary ledger
shows a $36 credit balance in the account of Kohl Company and that the payment to them
should have been for $284.
(4) The total amount of checks still outstanding at September 30 amounted to $6,000.
(5) Check No. 138 was correctly written and paid by the bank for $409. The cash payment journal
reflects an entry for Check No. 138 as a debit to Accounts Payable and a credit to Cash in Bank
for $490.
(6) The bank returned an NSF check from a customer for $560.
(7) The bank included a credit memorandum for $1,260 which represents collection of a customer's
note by the bank for the company; principal amount of the note was $1,200 and interest was
$60. Interest has not been accrued.
Instructions : Prepare the bank reconciliation !

Essay 3 (20%)
Madina Corporation's equity section at December 31, 2016 appears below:
Equity
Share capital–ordinary, $10 par, 60,000 outstanding $600,000
Share premium–ordinary 150,000
Retained earnings 150,000
Total equity $900,000

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 On June 30, 2017, the board of directors of Madina Corporation declared a 20% share
dividend, payable on July 31, 2017 to shareholders and recorded on July 15, 2017. The fair value
of Kenner Corporation's shares on June 30, 2017, was $15.
 On December 1, 2017, the board of directors declared a 2 for 1 share split, effective
December 15, 2017. Madina Corporation's shares was selling for $20 on December 1, 2017,
before the share split was declared. Par value of the shares was adjusted. Net income for 2017
was $190,000 and there were no cash dividends declared.
Instructions
(a) Prepare the journal entries on the appropriate dates to record the share dividend and the share
split.
(b) Fill in the amount that would appear in the equity section for Madina Corporation at December
31, 2017, for the following items:
1. Share Capital–Ordinary $____________
2. Number of shares outstanding _____________
3. Par value per share $____________
4. Share premium $____________
5. Retained earnings $____________
6. Total equity $____________

Essay 4 (15%)
Kuy Company uses the periodic inventory system to account for inventories. Information related to
Kinnetics Company's inventory at December 31 is given below:
Dec 1 Beginning inventory 200 units @ $10.00 = $ 2,000
8 Purchase 400 units @ $10.40 = 4,160
16 Purchase 300 units @ $10.80 = 3,240
24 Purchase 100 units @ $11.60 = 1,160
Total units and cost 1,000 units $10,560
Instructions:
1. If 300 units remain on hand on December 31, the selling price is 20/unit, Show computations to:
a. value the ending inventory using the FIFO cost assumption
b. determine the COGS and gross profit
2. Show computations to value the ending inventory using the weighted-average cost method if 300
units remain on hand at December 31 and determine the COGS.

GOOD LUCK & BE HONEST