Microsoft Word Midterm Examination2 1 THE NATIONAL ECONOMICS UNIVERSITY THE HIGH QUALITY MARKETING INTAKE 63 COURSE ACCOUNTING PRINCIPLES MID TERM EXAMINATION 2 STUDENT NAME ID Question 1 (3points) Th.
THE NATIONAL ECONOMICS UNIVERSITY THE HIGH QUALITY- MARKETING INTAKE 63 COURSE: ACCOUNTING PRINCIPLES MID-TERM EXAMINATION STUDENT NAME:……………………………………………… ID:………………………… Question (3points): The December 31, 2015 balance sheet of Barone Company had Accounts Receivable of $400,000 and a credit balance in Allowance for Doubtful Accounts of $32,000 During 2016, the following transactions occurred: sales on account $1,500,000; sales returns and allowances, $50,000; collections from customers, $1,250,000; accounts written off $36,000; previously written off accounts of $6,000 were collected Requirement: (a) Journalize the 2016 transactions (b) If the company uses the percentage-of-sales basis to estimate bad debt expense and anticipates 3% of net sales to be uncollectible, what is the adjusting entry at December 31, 2016? (c) If the company uses the percentage of receivables basis to estimate bad debt expense and determines that uncollectible accounts are expected to be 8% of accounts receivable, what is the adjusting entry at December 31, 2016? Question 2: (3points) South Airlines purchased a 747 aircraft on January 1, 2015, at a cost of $35,000,000 The estimated useful life of the aircraft is 20 years, with an estimated salvage value of $5,000,000 On January 1, 2018 the airline revises the total estimated useful life to 15 years with a revised salvage value of $3,500,000 Requirement: Compute the depreciation and book value at December 31, 2017 using the straight-line method and the double-declining-balance method Question (2 points): The inventory of Willamette Company was destroyed by fire on April From an examination of the accounting records, the following data for the first three months of the year are obtained: Sales Revenue $185,000 Sales Returns and Allowances 5,000 Purchases 110,000 Freight-In 4,000 Purchase Returns and Allowances 3,500 Instructions: Determine the merchandise lost by fire, assuming a beginning inventory of $50,000 and a gross profit rate of 45% on net sales Question (2 points): Selected comparative statement data for Pillow Products Company are presented below All balance sheet data are as of December 31 2017 $800,000 480,000 7,000 Net sales Cost of goods sold Interest expense 2016 $720,000 440,000 5,000 Net income Accounts receivable Inventory Total assets Total common stockholders' equity 60,000 120,000 85,000 600,000 430,000 Instructions Compute and explain the meaning of the following ratios for 2017: (a) Profit margin (b) Asset turnover (c) Return on assets 42,000 100,000 75,000 500,000 320,000 ... equity 60,000 120 ,000 85,000 600,000 430,000 Instructions Compute and explain the meaning of the following ratios for 20 17: (a) Profit margin (b) Asset turnover (c) Return on assets 42, 000 100,000... 20 17: (a) Profit margin (b) Asset turnover (c) Return on assets 42, 000 100,000 75,000 500,000 320 ,000