University of Maryland University College
Final Examination
Acct310: Intermediate Accounting I
For this exam, omit all general journal entry explanations.
Ensure to include correct dollar signs, underlines & double underlines,
when required. Ensure to use proper financial document format details
such as blank lines where required. Unless otherwise noted, all fiscal
years end on December 31.
Question 1: 25% points: Presented below is information related to Woozie Floozy
Company for 2014. (All balances are normal.)
Retained earnings balance, January 1, 2014 $ 980,000
Sales for the year 25,000,000
Cost of goods sold 17,000,000
Interest revenue 70,000
Selling and administrative expenses 4,700,000
Write-off of goodwill (not tax deductible) 820,000
Income taxes for 2014 905,000
Gain on the sale of investments (normal recurring) 110,000
Loss due to flood damage—extraordinary item (net of tax) 390,000
Loss on the disposition of the wholesale division 815,000
Loss on operations of the wholesale division 200,000
Income tax benefit from discontinued wholesale division 285,000
Dividends declared on common stock 250,000
Dividends declared on preferred stock 50,000
Woozie Floozy Company decided to discontinue its entire wholesale operations and
to retain its manufacturing operations. On September 15, Woozie Floozy sold the
wholesale operations to Flippy-Floppy Company. During 2014, there were 200,000
shares of common stock outstanding all year.
Requirement: Prepare a multistep income statement.
Question 2: 20% points:
On June 1, 2014, Flippy-Floppy purchased a manufacturing machine for
$864,000. The machine has an eight-year estimated life and a $44,000 estimated
salvage value. Flippy-Floppy expects to manufacture 1,800,000 units over the life
of the machine.
Required: Complete the required depreciation schedules on the manufacturing
machine for each method listed. (Do not provide any supporting calculations.)
The additional production information is as follows:
Year Production
2014 110,000
2015 300,000
2016 350,000
2017 350,000
2018 500,000
2019 450,000
2020 375,000
2021 400,000
Schedules for:
a. Straight-line.
Year
Depreciation
Expense
Accumulated
Depreciation
End of Year Book
Value
2014
2015
2016
b. Double-declining balance.
Year
Depreciation
Expense
Accumulated
Depreciation
End of Year Book
Value
2014
2015
2016
2017
2018
2019
2020
2021
2022
c. Sum-of-the-years’ digits.
Year
Depreciation
Expense
Accumulated
Depreciation
End of Year Book
Value
2014
2015
2016
2017
2018
2019
2020
2021
2022
d. Units of production.
Year
Depreciation
Expense
Accumulated
Depreciation
End of Year Book
Value
2014
2015
2016
2017
2018
2019
2020
2021
Question 3: 30% points:
Selected accounts included in the property, plant, and equipment section of
Flipper Corporation’s balance sheet at December 31, 2014, had the following
balances:
Land $ 400,000
Land improvements 130,000
Buildings 2,000,000
Machinery and
equipment
800,000
During 2015, the following transactions occurred:
a. A tract of land was acquired for $200,000 as a potential future
building site from Flopper Corp.
b. A plant facility consisting of land and building was acquired from
Flimsy Company in exchange for 20,000 shares of Flipper’s common
stock. On the acquisition date, Flipper’s stock had a closing market
price of $42 per share on a national stock exchange. The plant facility
was carried on Flimsy’s books at $178,000 for land and $520,000 for
the building at the exchange date. Current appraised values for the
land and the building, respectively, are $200,000 and $800,000. The
building has an expected life of forty years with a $20,000 salvage
value.
c. Items of machinery and equipment were purchased from
Guess Who Equipment at a total cost of $400,000. Additional
costs were incurred as follows: freight and unloading,
$13,000; installation, $26,000. The equipment has a useful
life of ten years with no salvage value.
d. Expenditures totaling $ 120,000 were made for new parking
lots, street, and sidewalks at the corporation’s various plant
locations. These expenditures had an estimated useful life of
fifteen years.
e. Research and development costs were $110,000 for the year.
Required: Indicate the capitalized cost of each asset
acquired during 2015. Prepare the General Journal entries
for any amortization and depreciation expense recorded for
each of the acquired items in 2015. If no entry is necessary,
write “no entry.”
Question 4: 25% points:
Selected accounts included in the property, plant, and equipment
section of Faulty Corporation’s balance sheet at December 31, 2017,
had the following balances:
Land $ 400,000
Land improvements 130,000
Buildings 2,000,000
Machinery and equipment 800,000
During 2018, the following transactions occurred:
>> A machine costing $18,000 on July 1, 2011, was scrapped on
June 30, 2018. Straight-line depreciation had been recorded on
the basis of a 10-year life with no salvage value.
>> A machine was sold for $38,000 on July 1, 2018. Original cost of
the machine was $74,000 on January 1, 2015, and it was
depreciated on the sum-of-the-years’ digits basis over an
estimated useful life of eight years and a salvage value of
$2,000.
Required:
a. Calculate the gain or loss on the disposal of each asset. Place your answer in the
appropriate column.
b. Prepare the journal entries for the disposal & sale of the machine
during 2018. Year 2018 depreciation has yet been recorded.

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