Sample Final Exam

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QUESTION 1 – (16 Marks) – 28 minutes

The following data is from the accounts of Fleury Corporation on December 31, 2005, the end of the current reporting year. Dr.Cr.

Cash$116,000
Accounts receivable, trade337,000
Short-term investment in marketable securities440,000
Inventory of merchandise, FIFO1,295,000
Prepaid expense (short term)11,000
Investment in Hydro One Bonds
(Held to Maturity – June 30, 2008)147,000
Advances to suppliers (short term)24,000
Dividends (cash) declared during 2005120,000
Rent receivable34,000
Investment in shares of Life Systems Corporation
(long term, at market)322,000
Unamortized discount on bonds payable42,000
Loans to employees (company president;
payment date uncertain)225,000
Land (building site in use)3,300,000
Building7,450,000
Equipment3,236,000
Trademark610,000
Deferred equipment rearrangement cost
(long term)74,000
Total debits$17,783,000

Mortgage payable (due 2009 14%)6,500,000
Accounts payable, trade426,000
Dividends (cash) payable (payable 1 March 2006)10,000
Deferred rent revenue63,000
Future income tax544,000
Accumulated amortization, building4,210,000
Accumulated amortization, equipment420,000
Allowance for doubtful accounts32,000
Bonds payable (12.5%, maturity 2013)2,200,000
Common shares (50,000 shares outstanding)1,400,000
Accumulated other comprehensive income400,000
Retained earnings, 1 January 20051,190,000
Net income for 2005388,000
Total credits17,783,000

Required:
1.Prepare a complete balance sheet. Assume that all amounts are correct, and round to the nearest thousand dollar. Use the account titles as given.

QUESTION 1: (16 MARKS)

Fleury Corporation (0.5)
Balance Sheet (in 000’s) (0.5)
31 December 20x5 (0.5)

Assets
Current assets: (0.5)
Cash (0.5)$ 116
Short-term investment in marketable securities440
Accounts receivable (trade)$ 337
Less: Allowance for doubtful accounts 32305 (0.5)
Inventory of merchandise (FIFO) (0.5)1,295
Prepaid expenses11
Rent receivable34
Advances to suppliers 24
Total current assets2,225 (0.5)
Investments and funds:
Investment in shares of LifeSystems Corporation322
Bond sinking fund 147469
Land, building and equipment:
Land3,300
Building$7,450
Less: Accumulated amortization 4,2103,240 (0.5)
Equipment3,236
Less: Accumulated amortization 420 2,816(0.5) 9,356 Intangible assets:
Franchise (unamortized cost)610
Other assets:
Loans to officer225
Deferred charges:
Deferred equipment rearrangement cost 74
Total assets $12,959 (0.5)

Liabilities
Current liabilities: (0.5)
Accounts payable (trade) (0.5)$ 426
Dividends payable (0.5)10
Deferred rent revenue (0.5) 63
Total current liabilities 499 (0.5)

Long-term liabilities: (0.5)
Mortgage payable, 14%, 20X9 (0.5)$ 6,500
Bonds payable, 12.5%, due in 20x13 (0.5)$2,200
Less: Unamortized discount 42 2,158 (0.5)
Future income tax 544 9,202
Total liabilities9,701 (0.5)

Shareholders’ Equity (0.5)
Contributed capital:
Common shares, outstanding 50,000 shares1,400
Total contributed capital 1,400 (0.5)
Retained earnings (0.5) ($1,190 + $388 – $120) 1,458 (1)
Accumulated Other Comprehensive Income400 (0.5
1,858 (0.5)
Total shareholders’ equity (0.5) 3,258 (0.5)
Total liabilities and shareholders’ equity (0.5) $12,959 (0.5)

QUESTION 3 – (12 Marks) – 22 minutes

The accounts of Long Company provided the following 2005 information at December 31, 2005 (end of the annual period):

Accounts receivable balance, January 1, 2005$51,000
Allowance for doubtful accounts balance, January 1, 2005...
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