AFR Final Exam

ARAB ACADEMY FOR SCIENCE, TECHNOLOGY AND MARITIME TRANSPORT
GRADUATE SCHOOL OF BUSINESS - SMART VILLAGE CAMPUS
ACCOUNTING & FINANCIAL REPORTING

FINAL EXAM
TIME ALLOWED: 2 hours MARKS: 40 marks
Question 1 (10 marks)
A. Greg’s Tunes purchased a truck on January 1, 2011, for $41,000. The truck’s expected useful life was
5 years, and the expected residual value is $1,000. The business uses straight-line depreciation and
$16,000 has been recorded in total accumulated depreciation through December 31, 2012.
Required: Prepare Greg’s Tunes’ journal entries on March 31, 2013, in each of the following cases:
a. The truck is in an accident and is totaled. The truck is completely worthless and must be
scrapped for $0.
b. Greg’s Tunes sells the truck for $10,000 cash.
c. Greg’s Tunes sells the truck to Harry’s Hot Dogs. Harry’s gives Greg’s $20,000 cash and a
piece of equipment worth $5,000.
d. Greg’s Tunes trades the old truck in for a new Toyota truck. The fair market value of the Toyota
truck is $32,000.
B. At the beginning of 2012, Logan Services purchased a Xerox copy machine for $40,400. Logan
Services expects the machine to last for four years (160,000 copies) and to have a residual value of
$2,000. Logan Services expects the machine to make 30,000 copies during the first year and
50,000 copies during the second year.
Required: Compute the first and second-year depreciation on the machine using the following methods:
a. Straight-line
b. Units-of-production

Thelma’s Amusements completed the following transactions during November 2012:
Nov 4 Purchased inventory on credit terms of 3/10, n/EOM, $9,600.
8 Returned half the inventory purchased on November 4. It was not the inventory ordered.
13 Sold inventory on credit terms of 2/15, n/45, $9,900 (cost, $5,300).
14 Paid the amount owed on account from November 4, less the return (November 8) and the
discount.
Received defective inventory as a sales return from the November 13 sale, $600. Thelma’s
17 cost of the inventory received was $450.
18 Purchased inventory of $4,100 on account. Payment terms were 2/10, net 30.
26 Paid the net amount owed for the November 18 purchase less the discount.
Received cash in full settlement of the account from the customer who purchased inventory
28 on November 13, less the return and the discount.
29 Purchased inventory for cash, $12,000, plus freight charges of $200.
Required: Journalize the transactions on the books of Thelma’s Amusements.
5
Thelma’s Amusements bought and sold the following inventory during March:
Date Balance/Transaction No. of units Cost

March 1 Beginning Inventory 10 units $20
March 4 Sale 8 units
March 10 Purchase 12 units $22
March 20 Purchase 10 units $24
Required: Compute the total COGS and Ending Inventory for March using the following
methods:
a. FIFO
b. LIFO
c. Weighted-Average
Relaxing Recliner Chairs completed the following transactions:
2013
Jul 1 Sold inventory to Great–Mart, receiving a $45,000, nine-month, 12% note. Ignore cost of goods sold.
Oct 31 Recorded credit- and debit-card sales for the period of $21,000 using the gross method.
Nov 3 Card processor drafted company’s checking account for processing fee of $410.
Dec 31 Made an adjusting entry to accrue interest on the Great–Mart note.
Made an adjusting entry to record uncollectible account expense based on an aging of accounts
Dec 31 receivable. The aging schedule shows that $15,200 of accounts receivable will not be collected. Prior to
this adjustment, the credit balance in Allowance for uncollectible accounts is $11,600.
2014
Apr 1 Collected the maturity value and interest of the Great–Mart note.
Jun 23 Sold merchandise to Ambiance, Corp., receiving a 60-day, 9% note for $13,000. Ignore cost of goods
sold.
Aug 23 Collected in full on account from Ambiance, Corp.
Nov 16 Loaned $21,000 cash to Creed, Inc., receiving a 90-day, 8% note.
Dec 31 Accrued the interest on the Creed, Inc., note.
Required: Record the transactions in the journal of Relaxing Recliner Chairs. Explanations are not
required. (For notes stated in days, use a 360-day year. Round to the nearest dollar.)

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ARAB ACADEMY FOR SCIENCE, TECHNOLOGY AND MARITIME TRANSPORT

GRADUATE SCHOOL OF BUSINESS - SMART VILLAGE CAMPUS

ACCOUNTING & FINANCIAL REPORTING

TIME ALLOWED: 2 hours MARKS: 40 marks

Question 1 (10 marks)

Question 2 (11 marks)

Required: Journalize the transactions on the books of Thelma’s Amusements.

Date Balance/Transaction No. of units Cost

Question 4 (10 marks)

Relaxing Recliner Chairs completed the following transactions:

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