ACC 20364 Accounting for Business Operations Final Examination

ACC 20364 Accounting for Business Operations Final Examination


Accounting for Business Operations


ACC 20364 – Final Examination




Bella’s Beauty Salon’s unadjusted trial balance for the current year follows:

Additional information:


An insurance policy examination showed $1,240 of expired insurance.

  1. An inventory count showed $210 of unused shop supplies still available.
  2. Depreciation expense on shop equipment, $350.
  3. Depreciation expense on the building, $2,220.
  4. A beautician is behind on space rental payments and $200 of accrued revenue was unrecorded at the time the trial balance was prepared.
  5. $800 of the Unearned Rent account balance was earned by year-end.
  6. The one employee, a receptionist, works a five-day workweek at $50 per day. The employee was paid last week but has worked four days this week for which she has not been paid.
  7. Three months’ property taxes, totaling $450, have accrued. This additional amount of property taxes expense has not been recorded.
  8. One month’s interest on the note payable, $600, has accrued but is unrecorded.





Based on the additional information, prepare the adjusting journal entries for Bella’s Beauty Salon.








The following is the adjusted trial balance for Rapid Car Services for the most recent year:



Rapid Car Services, Inc.

Adjusted Trial Balance

For the year ended December 31

Cash    $33,000

Accounts receivable    14,200

Office supplies            1,700

Vehicles          100,000

Accumulated depreciation—Vehicles                        45,000

Accounts payable                    11,500

Common stock                        1,000

Retained earnings                   70,900

Dividends       40,000

Fees earned                 155,000

Rent expense   13,000

Office supplies expense          2,000

Utilities expense          2,500

Depreciation Expense—Vehicles       15,000

Salary expense            50,000

Fuel expense         12,000

Totals     $283,400        $283,400







Prepare the following financial statements for Rapid Car Services, Inc. from the adjusted trial balance.  Assume the stockholders did not make any additional investments in the company during the year.


Income Statement


Statement of Retained Earnings


Balance Sheet














END Company reported the current month purchase and sales data for its only product as follows:

Date    Activities         Units Acquired at Cost           Units Sold at Retail

April 1 Beginning Inventory   175 units @ $15.00

4          Purchase          150 units @ $16.00

7          Sales                160 units @ $30.00

10        Purchase          200 units @ $17.00

16        Sales                250 units @ $30.00

25        Purchase          160 units @ $18.00

28        Sales                150 units @ $32.00







Determine the cost assigned to ending inventory and cost of goods sold using LIFO with the perpetual inventory system.












The following information is available for the Edwards Company for its March 31 bank reconciliation:

From the March 31 bank statement:


NSF: A check from a customer, Cook Co. in payment of their account.

IN: Interest earned on the account.


From the Edwards Company’s accounting records:




Based on the above information, prepare the2-column bank reconciliation for the Edwards Company for March.




Information for JasonMetalworks as of December 31 follows.

Administrative salaries expense          $135,000

Depreciation expense—Factory equipment    52,400

Depreciation expense—Delivery vehicles      36,200

Depreciation expense—Office equipment      24,800

Advertising expense   22,350

Direct labor     268,000

Factory supplies used  12,000

Income taxes expense 91,500

Indirect labor  35,000

Indirect material          24,000

Factory insurance        15,500

Factory utilities           14,000

Factory maintenance   7,500


Raw materials inventory, January 1 32,000

Raw materials inventory, December 31       28,000

Work in Process inventory, January 1          33,780

Work in Process inventory, December 31    37,460

Finished goods inventory, January 1           56,970

Finished goods inventory, December 31     62,000

Raw materials purchases         325,000

Rent expense—Factory          50,000

Rent expense—Office space  24,000

Rent expense—Selling Space 24,000

Sales salaries expense  97,500

Sales    1,452,000

Sales discounts            29,000









Prepare the company’s schedule of cost of goods manufactured for the year ended December 31



Prepare the company’s income statement that reports separate categories for selling and general and administrative expenses.

Wagner Company is analyzing two alternative methods of producing its product. The production manager indicates that variable costs can be reduced 40% by installing a machine that automates production, but fixed costs would increase. Alternative 1 shows costs before installing the machine; Alternative 2 shows costs after the machine is installed.

Alternative 1   Alternative 2

Variable costs per unit            $20      ?

Fixed costs      $200,000         $274,400

Selling price per unit   $40      $40

Income tax rate           25%     25%







(a) Compute the break-even point in units and dollars for both alternatives.


(b) Prepare a forecasted income statement for both alternatives assuming that 30,000 units will be sold. The statements should report sales, total variable costs, contribution margin, fixed costs, income before taxes, income taxes, and net income.


(c) Compute the degree of operating leverage for each alternative. Which alternative would you recommend and why?



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