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                                                 Baruch College – CUNY

                                       Stan Ross Department of Accountancy

                                       Accountancy 3000 - Section TR24 –A

                                             Fall 2003 –  Prof Jan Sweeney

                                                      Quiz 1 - Solution

Q1  Part A or B           Adjusting Entries     (8 points)  

      a.   Depreciation Expense ..........................................................................        12,500

                        Accumulated Depreciation of F. & E. ..................................................                             12,500

      b.   Insurance Expense .................................................................................          2,400

                        Prepaid Insurance ...............................................................................                               2,400

      c.   Interest Receivable ...................................................................................             900

                        Interest Revenue .................................................................................                                  900

      d.   Salaries Expense ....................................................................................          5,000

                        Salaries Payable .................................................................................                               5,000

Part B  Closing Entries     (8 points)  

      Revenues .................................................................................................      266.000

                  Income Summary ......................................................................................                           266,000

      Income Summary .....................................................................................      230,800

                  Salaries Expense .......................................................................................                           145,000

                  Rent Expense ...........................................................................................                             22,800

                  Other Expenses.........................................................................................                             63,500

      Income Summary .......................................................................................        35,200

                  Retained Earnings .....................................................................................                             35,200

Q2 (14 points)
                                                     Flynn Beef Company

INCOME STATEMENT

For the Year Ended December 31, 2002

Sales                                                                                                                                 $1,400,000

Cost of goods sold                                                                                                                 820,000

Gross profit                                                                                                                            580,000

Selling and administrative expenses                                                                                         240,000

Income from operations                                                                                                          340,000

Other revenue                                                                                                                          60,000

Other expenses                                                                                                                       (50,000)

Income before taxes, discontinued operation and extraordinary item                                        350,000

Income taxes                                                                                                                        (105,000)

Income before discontinued operation                                                                                     245,000

Gain on Sale from Discontinued Operation net of

      applicable income taxes of $75,000                                                                                   175,000

Net income                                                                                                                     $     420,000

Per share of common stock—

         Income before extraordinary item                            $4.90

         Extraordinary item, net of tax                                     3.50*

         Net income                                                             $8.40

*(This figure is optional.)

                                                 Baruch College – CUNY

                                       Stan Ross Department of Accountancy

                                       Accountancy 3000 - Section TR24 –A

                                             Fall 2003 –  Prof Jan Sweeney

                                                      Quiz 1 - Solution

Q 1Part A  Closing Entries     (8 points)  

      Revenues .................................................................................................      266.000

                  Income Summary ......................................................................................                           266,000

      Income Summary .....................................................................................      230,800

                  Salaries Expense .......................................................................................                           145,000

                  Rent Expense ...........................................................................................                             22,800

                  Other Expenses.........................................................................................                             63,500

      Income Summary .......................................................................................        35,200

                  Retained Earnings .....................................................................................                             35,200

Q  Part B Adjusting Entries     (8 points)  

      a.   Depreciation Expense ..........................................................................        12,500

                        Accumulated Depreciation of F. & E. ..................................................                             12,500

      b.   Insurance Expense .................................................................................          2,400

                        Prepaid Insurance ...............................................................................                               2,400

      c.   Interest Receivable ...................................................................................             900

                        Interest Revenue .................................................................................                                  900

      d.   Salaries Expense ....................................................................................          5,000

                        Salaries Payable .................................................................................                               5,000

Q2 (14 points)

Flynn Beef Company

INCOME STATEMENT

For the Year Ended December 31, 2002

Sales                                                                                                                                 $1,400,000

Cost of goods sold                                                                                                                 820,000

Gross profit                                                                                                                            580,000

Selling and administrative expenses                                                                                         240,000

Income from operations                                                                                                          340,000

Other revenue                                                                                                                          60,000

Other expenses                                                                                                                       (50,000)

Income before taxes, discontinued operation and extraordinary item                                        350,000

Income taxes                                                                                                                        (105,000)

Income before discontinued operation                                                                                     245,000

Gain on Sale from Discontinued Operation net of

      applicable income taxes of $75,000                                                                                   175,000

Net income                                                                                                                     $     420,000

Per share of common stock—

         Income before extraordinary item                            $4.90

         Extraordinary item, net of tax                                     3.50*

         Net income                                                             $8.40

*(This figure is optional.)

                                                 Baruch College – CUNY

                                       Stan Ross Department of Accountancy

                                       Accountancy 3000 - Section TR24 –C

                                             Fall 2003 –  Prof Jan Sweeney

                                                      Quiz 1 - Solution

 

Q1 Part A        Adjusting Entries     (8 points)  

      a.   Depreciation Expense ..........................................................................        15,000

                        Accumulated Depreciation of F. & E. ..................................................                             15,000

      b.   Interest Receivable ...................................................................................             900

                        Interest Revenue .................................................................................                                  900

      d.   Prepaid Rent                                                                                  ......................................................................................          3,000

                        Rent Expense .....................................................................................                               3,000                          

      e.   Salaries Expense ....................................................................................          4,000

                        Salaries Payable .................................................................................                               4,000

Part B  Closing Entries     (8 points)  

      Sales                                                                                                    ....................................................................................................      266.000

                  Income Summary ......................................................................................                           266,000

       Income Summary ....................................................................................      230,800

                  Salaries Expense .......................................................................................                           163,000

                  Rent Expense ...........................................................................................                             22,800

                  Other Expenses.........................................................................................                             45,000

      Income Summary .......................................................................................        35,200

                  Retained Earnings .....................................................................................                             35,200

Q2 (14 points)

Flynn Beef Company

INCOME STATEMENT

For the Year Ended December 31, 2002

Sales                                                                                                                                 $1,400,000

Cost of goods sold                                                                                                                 820,000

Gross profit                                                                                                                            580,000

Selling and administrative expenses                                                                                         240,000

Income from operations                                                                                                          340,000

Other revenue                                                                                                                          60,000

Other expenses                                                                                                                       (50,000)

Income before taxes, discontinued operation and extraordinary item                                        350,000

Income taxes                                                                                                                        (105,000)

Income before discontinued operation                                                                                     245,000

Gain on Sale from Discontinued Chicken Operation net of

      applicable income taxes of $90,000                                                                                  210,000

Net income                                                                                                                     $     455,000

Per share of common stock—

         Income before extraordinary item                            $4.90

         Extraordinary item, net of tax                                    4.20*

         Net income                                                             $9.10

*(This figure is optional.)

                                                 Baruch College – CUNY

                                       Stan Ross Department of Accountancy

                                       Accountancy 3000 - Section TR24 –D

                                             Fall 2003 –  Prof Jan Sweeney

                                                      Quiz 1 - Solution

 

Q1 Part A          Closing Entries     (8 points)  

      Sales                                                                                                    ....................................................................................................      266.000

                  Income Summary ......................................................................................                           266,000

      Income Summary .....................................................................................      230,800

                  Salaries Expense .......................................................................................                           163,000

                  Rent Expense ...........................................................................................                             22,800

                  Other Expenses.........................................................................................                             45,000

      Income Summary .......................................................................................        35,200

                  Retained Earnings .....................................................................................                             35,200

Part B Adjusting Entries     (8 points)  

      a.   Depreciation Expense ..........................................................................        15,000

                        Accumulated Depreciation of F. & E. ..................................................                             15,000

      b.   Interest Receivable ...................................................................................             900

                        Interest Revenue .................................................................................                                  900

      d.   Prepaid Rent                                                                                  ......................................................................................          3,000

                        Rent Expense .....................................................................................                               3,000                          

      e.   Salaries Expense ....................................................................................          4,000

                                    Salaries Payable                                                                                   4,000

Q2 (14 points)

Flynn Beef Company

INCOME STATEMENT

For the Year Ended December 31, 2002

Sales                                                                                                                                 $1,400,000

Cost of goods sold                                                                                                                 820,000

Gross profit                                                                                                                            580,000

Selling and administrative expenses                                                                                         240,000

Income from operations                                                                                                          340,000

Other revenue                                                                                                                          60,000

Other expenses                                                                                                                       (50,000)

Income before taxes, discontinued operation and extraordinary item                                        350,000

Income taxes                                                                                                                        (105,000)

Income before discontinued operation                                                                                     245,000

Gain on Sale from Discontinued Chicken Operation net of

      applicable income taxes of $90,000                                                                                   210,000

Net income                                                                                                                      $    455,000

Per share of common stock—

         Income before extraordinary item                            $4.90

         Extraordinary item, net of tax                                    4.20*

         Net income                                                             $9.10

*(This figure is optional.)