LAST NAME: _________________ FIRST NAME: _____________________ ID: ___________________ Section: __ 1 ___ Version: __ ___ ANSWER SHEET College of Management AF210 – FINANCIAL ACCOUNTING Spring 2020 Exam 2 – Tuesday, April 14, 2020 Type your name and ID above. Answer all problems. To ensure full credit and to maximize partial credit on problems, fill in all boxes highlighted in blue in the answer sheet. Type your answers in this answer sheet file and clearly show all supporting work. You can also attach a separate file of your work (e.g., a file containing pictures of your hand-written work) to your completed answer sheet. If you use a separate file to show your work, clearly state the problem number in the supporting file. Time allowed: Send your completed answer sheet (the answer sheet word file) to me (KoEun.Park@umb.edu) by 5:30 PM on April 14. For a submission received between 5:30 PM and midnight of April 14, 10 points will be deducted from your score for late submission. Any submission after midnight will not be accepted. GOOD LUCK. Problem 1 (15 points) ________ Problem 2 (15 points) ________ Problem 3 (20 points) ________ Problem 4 (20 points) ________ Problem 5 (15 points) ________ Problem 6 (15 points) ________ TOTAL (100 points) ________ Fill in all boxes highlighted in blue and show all your work where appropriate to maximize partial credit. Problem 1 (15 points) 1) Journal entry of the transaction – Enter an account name following debit (Dr.) and credit (Cr.), and enter dollar amounts in the table below. Dr. $ Cr. $ 2) The financial ratio before the transaction = Explain your calculation in the table below. Numerator = Denominator = 3) The financial ratio after the transaction = Explain your calculation in the table below. Numerator = Denominator = Include here if you want to further explain your work (optional): Problem 2 (15 points) 1) Click on each alphabet of a) through e) and type each component following the alphabet in the diagram below. An example is provided in the a). a) ROE b) d) c) e) 2) Provide an equation (an account name in the numerator and denominator) for each component of a) through e). a) Numerator = Denominator = b) Numerator = Denominator = c) Numerator = Denominator = d) Numerator = Denominator = e) Numerator = Denominator = Include here if you want to further explain your work (optional): Problem 3 (20 points) 1) Analyze each transaction and type accounts and dollar amounts to be reported for each date in boxes highlighted in blue in the table below. Date Account Dollar amount Nov. 20 Nov. 25 Nov. 28 Nov. 29 Dec. 6 Dec. 20 2) Calculate net sales reported in the Balance Sheet in the table below. Fill in all boxes highlighted in blue in the table. Account Dollar amount Less: (contra-accounts below) Net sales Include here if you want to further explain your work (optional): Problem 4 (20 points) Complete the table below for the balance sheet and income statement by filling in boxes highlighted in blue. You can use a T-account for each as we did in class. However, you don’t need to include your T-accounts here. If you want, include how you get each balance in the optional explanation space below. Balance Sheet Current Assets: Accounts Receivable Less: Allowance for Doubtful Accounts Net Accounts Receivable Income Statement Operating Expenses: Bad Debt Expense Include here if you want to further explain your work (optional): Problem 5 (15 points) Complete the table below by filling in boxes highlighted in blue. Account Goods available for sale = Cost of goods sold = Gross profit = Calculation Answer Problem 6 (15 points) 1) Cost of Goods Sold = Explain your calculation below: 2) Ending inventory = Explain your calculation below: LAST NAME: _______________________ FIRST NAME: ________________________ ID: ______________________________ Section: __ 1 ___ Version: __ ___ College of Management University of Massachusetts Boston AF210 – FINANCIAL ACCOUNTING Spring 2020 Exam 2 – Tuesday, April 14, 2020 This exam (the exam pdf file) consists of 6 problems on 7 pages (including this cover page) for a total of 100 points. You are allowed to refer to class notes and textbook. However, you are not allowed to discuss exam questions with your classmates. Time allowed: Send your completed answer sheet (the answer sheet word file) to me (KoEun.Park@umb.edu) by 5:30 PM on April 14. For a submission received between 5:30 PM and midnight of April 14, 10 points will be deducted from your score for late submission. Any submission after midnight will not be accepted. Answer all problems. Type your answers in the separate word answer sheet file. To ensure full credit and to maximize partial credit on problems, clearly show all supporting calculations. GOOD LUCK. Problem 1 (15 points) ________ Problem 2 (15 points) ________ Problem 3 (20 points) ________ Problem 4 (20 points) ________ Problem 5 (15 points) ________ Problem 6 (15 points) ________ TOTAL (100 points) ________ 1 Show all your work where appropriate to maximize partial credit. Problem 1 (15 points) You have learned how to analyze a transaction (event). Each transaction affects financial statement items and thus financial ratios. Since financial ratios affect how a firm does its business, it is important to understand how an event affects ratios. Apple incurred an additional $2,500 in research and development expense paid for in cash. Assume that net income was $67,000 and sales was $210,000 before the transaction. What would be the effect on the net profit margin ratio? Journalize the transaction. In addition, calculate net profit margin before the transaction and net profit margin after the transaction. 2 Problem 2 (15 points) We have discussed DuPont Analysis, which a very common analysis technique that helps understand return on equity (ROE). Explain how we can decompose a firm’s performance using DuPont Analysis. 3 Problem 3 (20 points) The following transations were selected from among those completed by Crowley Retailers during November and December.  Nov. 20 – Sold 20 items of merchandise to Customer B at an invoice price of $8,300 (total); terms 3/10, n/30  Nov. 25 – Sold two items of merchandise to Customer C, who charged the $1,100 sales price on her Visa credit card. Visa charges Retailers a 2 percent crecdit card fee.  Nov. 28 – Sold 10 identical items of merchandise to Customer D at an invoice price of $12,000 (total); terms 3/10, n/30.  Nov. 29 – Customer D returned one of the items purchased on the 28 th; the item was defective, and credit was given to the customers.  Dec. 6 – Customer D paid the account balance in full.  Dec. 20 – Customer B paid in full for the invoice of November 20, 2013. Compute the net sales for the two months ended on December 31. 4 Problem 4 (20 points) At the end of the prior year, Ambiance Outdoor Outfitters reported the following information: Arrounts Receivable (Gross) $65,000; Allwance for Doubtful Accounts $11,000; Accounts Receivable (Net) $54,000. During the current year, sales on account were $350,000, collections on account were $280,000, write-offs of bad debts were $10,000, and the bad debt expense adjustment was $5,000. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the income statmeent and balance sheet for the current year. 5 Problem 5 (15 points) Using the cost of goods sold equation, supply the missing dollar amounts for the income statement. Net sales revenue Beginning inventory Purchases Goods available for sale Ending inventory $ $ 7,500 11,200 4,500 ? 9,000 Cost of goods sold Gross profit Expenses Pretax income ? ? 300 $ 500 6 Problem 6 (15 points) Penn Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units Unit Cost 2000 $ 6 Inventory, December 31, prior year For the current year: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 6000 $ 4000 $ 3000 8 9 Compute ending inventory and costs of goods sold for the current year under FIFO inventory costing methods. 7
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