ACCT 310 Final Exam (UMUC)

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University of Maryland University College
Final Examination
Acct310: Intermediate Accounting I
Question 1: 10% points: Frick Corporation's capital structure consists of 50,000 shares of common
stock. At December 31, 2014 an analysis of the accounts and discussions with company officials
revealed the following information:
Question 2: 10% points: Selected financial statement information and additional data for Frack Co. is
presented below. Prepare a statement of cash flows for the year ending December 31, 2014. All
balances are normal.
Question 3: 10% points: On December 31, 2014, Flip Company finished consultation services and
accepted in exchange a promissory note with a face value of $600,000, a due date of December 31,
2017, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the
services is not readily determinable and the note is not readily marketable. Under the circumstances,
the note is considered to have an appropriate imputed rate of interest of 10%. Use factor tables (from
chapter 6) provided in our LEO class
Instructions:
a. Determine the present value of the note.
b. Prepare a Schedule of Note Discount Amortization for Flip Company under the effective interest
method. (Round to whole dollars.)
Question 4: 8% points: Flop Company adopted the dollar-value LIFO inventory method on 12/31/13.
On this date, its inventory consisted of the following items.
Question 5: 9% points: Flim Variety Store uses the LIFO retail inventory method. Information relating
to the computation of the inventory at December 31, 2014, follows:
Question 6: 10% points: Flam Co. had a sheet metal cutter that cost $120,000 on January 5, 2010.
This old cutter had an estimated life of ten years and a salvage value of $20,000. On April 3, 2015,
the old cutter is exchanged for a new cutter with a fair value of $60,000. The exchange lacked

commercial substance. Flam also received $15,000 cash. Assume that the last fiscal period ended
on December 31, 2014, and that sum-of-the-years digit depreciation method is used. Instructions:
a. What amount of the gain or loss will be recognized by Flam Co.
b. Prepare all entries that are necessary on April 3, 2015
Question 7: 9% points: A truck was acquired on July 1, 2012, at a cost of $162,000. The truck had a
six-year useful life and an estimated salvage value of $18,000. The double-declining balance method
of depreciation was used. On January 1, 2015, the truck was overhauled at a cost of $15,000, which
extended the useful life of the truck for an additional two years beyond that originally estimated
(salvage value is still estimated at $18,000). In computing depreciation for annual adjustment
purposes, expense is calculated for each month the asset is owned
Instructions: Prepare the appropriate entries for January 1, 2015 and December 31, 2015.
Question 8: 9% points: Floozy Corporation purchases a patent from Durler Company on January.1,
2014, for $72,000. The patent has a remaining legal of 16 years. Floozy feels the patent will be
useful for 10 years. Assume that at January 1, 2016, the carrying amount of the patent on Floozy's
books is $64,800. In January, Floozy spends $20,000 successfully defending a patent suit. Floozy
still feels the patent will be useful until the end of 2023.
Instructions: Prepare Floozy's journal entries to record the amortization for 2014 and 2016.
Multiple choice questions allocated 1% point each. Make your selection by recording the letter in the
answer box provided.
Question 9: Floozy Corp.'s trial balance of income statement accounts for the year ended December
31, 2014 included the following:
On Floozy's multiple-step income statement for 2014, Cost of goods manufactured is
a. $176,000.
b. $170,000.
c. $136,000.
d. $130,000.
Question 10: Which of the following should be reported as a prior period adjustment?
Question 11: The following trial balance of Floozy Corp. at December 31, 2014 has been properly
adjusted except for the income tax expense adjustment.
Other financial data for the year ended December 31, 2014:

Included in accounts receivable is $1,200,000 due from a customer and payable in quarterly
installments of $150,000. The last payment is due December 29, 2016.
The balance in the Deferred Income Tax Liability account pertains to a temporary difference that
arose in a prior year, of which $20,000 is classified as a current liability.
During the year, estimated tax payments of $525,000 were charged to income tax expense.
The current and future tax rate on all types of income is 30%. In Floozy's December 31, 2014
balance sheet, the current assets total is
a. $6,080,000.
b. $5,555,000.
c. $5,405,000.
d. $4,955,000.
Question 12: The following trial balance of Floozy Corp. at December 31, 2014 has been properly
adjusted except for the income tax expense adjustmen
Other financial data for the year ended December 31, 2014:
Included in accounts receivable is $1,200,000 due from a customer and payable in quarterly
installments of $150,000. The last payment is due December 29, 2016.
The balance in the Deferred Income Tax Liability account pertains to a temporary difference that
arose in a prior year, of which $20,000 is classified as a current liability.
During the year, estimated tax payments of $525,000 were charged to income tax expense.
The current and future tax rate on all types of income is 30%. In Floozy's December 31, 2014
balance sheet, the current liabilities total is
a. $1,850,000.
b. $1,915,000.
c. $2,375,000.
d. $2,440,000
Question 13: The following trial balance of Floozy Corp. at December 31, 2014 has been properly
adjusted except for the income tax expense adjustment
Other financial data for the year ended December 31, 2014:

Included in accounts receivable is $1,200,000 due from a customer and payable in quarterly
installments of $150,000. The last payment is due December 29, 2016.
The balance in the Deferred Income Tax Liability account pertains to a temporary difference that
arose in a prior year, of which $20,000 is classified as a current liability.
During the year, estimated tax payments of $525,000 were charged to income tax expense. The
current and future tax rate on all types of income is 30%.
In Floozy's December 31, 2014 balance sheet, the final retained earnings balance is a. $4,651,000.
b. $4,736,000. c. $5,176,000. d. $5,105,000
Question 14: Floozy Co. prepared an aging of its accounts receivable at December 31, 2014 and
determined that the net realizable value of the receivables was $600,000. Additional information is
available as follows:
Allowance for uncollectible accounts at 1/1/14credit balance $ 68,000
Accounts written off as uncollectible during 2014 46,000
Accounts receivable at 12/31/14 650,000
Uncollectible accounts recovered during 2014 10,000
For the year ended December 31, 2014, Floozy's uncollectible accounts expense would be
a. $50,000.
b. $46,000.
c. $32,000.
d. $18,000.
Question 15: On January 1, 2014, Floozy Co. exchanged equipment for a $600,000 zero-interestbearing note due on January 1, 2017. The prevailing rate of interest for a note of this type at January
1, 2014 was 10%. The present value of $1 at 10% for three periods is 0.75. What amount of interest
revenue should be included in Floozy's 2015 income statement?
a. $0
b. $45,000
c. $49,500
d. $60,000

Question 16: Which of the following is a method to generate cash from accounts receivable?
Question 17: The balance in Floozy Co.'s accounts payable account at December 31, 2014 was
$950,000 before any necessary year-end adjustments relating to the following:
Goods were in transit to Floozy from a vendor on December 31, 2014. The invoice cost was
$40,000. The goods were shipped f.o.b. shipping point on December 29, 2014 and were received on
January 4, 2015.
Goods shipped f.o.b. destination on December 21, 2014 from a vendor to Floozy were received on
January 6, 2015. The invoice cost was $25,000.
On December 27, 2014, Floozy wrote and recorded checks to creditors totaling $30,000 that were
mailed on January 10, 2015.
In Floozy's December 31, 2014 balance sheet, the accounts payable should be
a. $ 980,000.
b. $ 990,000.
c. $1,015,000.
d. $1,020,000.
Question 18: Floozy Co.'s accounts payable balance at December 31, 2014 was $1,400,000 before
considering the following transactions:
Goods were in transit from a vendor to Floozy on December 31, 2014.
The invoice price was $70,000, and the goods were shipped f.o.b. shipping point on December 29,
2014.
The goods were received on January 4, 2015.
Goods shipped to Floozy, f.o.b. shipping point on December 20, 2014, from a vendor were lost in
transit.
The invoice price was $50,000. On January 5, 2015, Floozy filed a $50,000 claim against the
common carrier.
In its December 31, 2014 balance sheet, Floozy should report accounts payable of
a. $1,520,000.
b. $1,470,000.

c. $1,450,000.
d. $1,400,000.
Question 19: Floozy Co. recorded the following data pertaining to raw material X during January
2014:
The moving-average unit cost of X inventory at January 31, 2014 is
a. $6.52.
b. $6.63.
c. $6.75.
d. $7.05
Question 20: Floozy Co. had 150 units of product A on hand at January 1, 2014, costing $21 each.
Purchases of product A during January were as follows
A physical count on January 31, 2014 shows 200 units of product A on hand. The cost of the
inventory at January 31, 2014 under the LIFO method is
a. $4,700.
b. $4,450.
c. $4,250.
d. $4,100
Question 21: Floozy Company's accounting records indicated the following information:
A physical inventory taken on December 31, 2014, resulted in an ending inventory of $1,400,000.
Floozy's gross profit on sales has remained constant at 25% in recent years. Floozy suspects some
inventory may have been taken by a new employee. At December 31, 2014, what is the estimated
cost of missing inventory?
a. $100,000.
b. $300,000.
c. $400,000.
d. $500,000

Question 22: Floozy, a chain of candy stores, purchases its candy in bulk from its suppliers. For a
recent shipment, the company paid $1,500 and received 8,500 pieces of candy that are allocated
among three groups. Group 1 consists of 2,500 pieces that are expected to sell for $0.15 each.
Group 2 consists of 5,500 pieces that are expected to sell for $0.36 each. Group 3 consists of 500
pieces that are expected to sell for $0.72 each.
Using the relative sales value method, what is the cost per item in Group 2?
a. $0.19.
b. $0.30.
c. $0.18.
d. $0.20
Question 23: The following information is available for October for Floozy Company
A fire destroyed Floozys October 31 inventory, leaving undamaged inventory with a cost of $18,000.
Using the gross profit method, the estimated ending inventory destroyed by fire is
a. $102,000.
b. $462,000.
c. $480,000.
d. $600,000
Question 24: On January 1, 2014, the merchandise inventory of Floozy, Inc. was $1,200,000. During
2014 Floozy purchased $2,400,000 of merchandise and recorded sales of $3,000,000. The gross
profit rate on these sales was 25%. What is the merchandise inventory of Floozy at December 31,
2014?
a. $600,000.
b. $750,000.
c. $1,350,000.
d. $2,250,000
Question 25: On December 1, 2014, Floozy Co. purchased a tract of land as a factory site for
$750,000. The old building on the property was razed, and salvaged materials resulting from
demolition were sold. Additional costs incurred and salvage proceeds realized during December
2014 were as follows:

In Floozy 's December 31, 2014 balance sheet, what amount should be reported as land?
a. $776,000.
b. $812,000.
c. $838,000.
d. $846,000
Question 26: Floozy Football Co. had a player contract with Watts that is recorded in its books at
$5,600,000 on July 1, 2014. Day Football Co. had a player contract with Kurtz that is recorded in its
books at $7,000,000 on July 1, 2014. On this date, Floozy traded Watts to Day for Kurtz and paid a
cash difference of $700,000. The fair value of the Kurtz contract was $8,400,000 on the exchange
date. The exchange had no commercial substance.
After the exchange, the Kurtz contract should be recorded in Floozy's books at
a. $6,300,000.
b. $7,000,000.
c. $7,700,000.
d. $8,400,000
Question 27: On September 10, 2014, Floozy Co. incurred the following costs for one of its printing
presses:
Neither the attachment nor the renovation increased the estimated useful life of the press. However,
the renovation resulted in significantly increased productivity.
What amount of the costs should be capitalized?
a. $0.
b. $57,000.
c. $68,000.
d. $75,000.

Question 28: Floozy Co. purchased a machine on July 1, 2014, for $800,000. The machine has an
estimated useful life of five years and a salvage value of $160,000. The machine is being
depreciated from the date of acquisition by the 150% declining-balance method.

For the year ended December 31, 2014, Floozy should record depreciation expense on this machine
of
a. $240,000.
b. $160,000.
c. $120,000.
d. $96,000
Question 29: A depreciable asset has an estimated 15% salvage value. At the end of its estimated
useful life, the accumulated depreciation would equal the original cost of the asset under which of
the following depreciation methods?
Question 30: Floozy Company acquired a tract of land containing an extractable natural resource.
Floozy is required by the purchase contract to restore the land to a condition suitable for recreational
use after it has extracted the natural resource. Geological surveys estimate that the recoverable
reserves will be 4,000,000 tons, and that the land will have a value of $600,000 after restoration.
Relevant cost information follows:
If Floozy maintains no inventories of extracted material, what should be the charge to depletion
expense per ton of extracted material?
a. $1.60
b. $1.75
c. $2.00
d. $1.90
Question 31: In January 2014, Floozy Mining Corporation purchased a mineral mine for $6,300,000
with removable ore estimated by geological surveys at 2,500,000 tons. The property has an
estimated value of $600,000 after the ore has been extracted. Floozy incurred $1,725,000 of
development costs preparing the property for the extraction of ore. During 2014, 390,000 tons were
removed and 350,000 tons were sold.
For the year ended December 31, 2014, Floozy should include what amount of depletion in its cost
of goods sold?
a. $798,000
b. $889,200
c. $1,039,500

d. $1,158,000
Question 32: Floozy Co. bought a patent from Flam Corp. on January 1, 2015, for $600,000. An
independent consultant retained by Floozy estimated that the remaining useful life at January 1,
2015 is 15 years. Its unamortized cost on Flams accounting records was $300,000; the patent had
been amortized for 5 years by Flam.
How much should be amortized for the year ended December 31, 2015 by Floozy Co.?
a. $0.
b. $30,000.
c. $40,000.
d. $60,000
Question 33: On January 1, 2011, Flam Company purchased a copyright for $1,500,000, having an
estimated useful life of 16 years. In January 2015, Flam paid $225,000 for legal fees in a successful
defense of the copyright. Copyright amortization expense for the year ended December 31, 2015,
should be
a. $0.
b. $93,750.
c. $107,812.
d. $112,500.