University of California, Irvine EXAM 2Exam 2 Prep Questions-1Laker Company reported the following January purchases and sales data for its only product.Date | $840Units Acquired at Cost 140 units @ $6.00 = | Activities | Units sold at RetailJan. 1 Beginning inventory Jan. 10 Sales | 100 units @ $15.00 = $1,500Jan. 20 Purchase | 30060 units @ $5.00 =Jan. 25 Sales | 80 units @ $15.00 = $1,2
Exam 2 Prep Questions-1
Laker Company reported the following January purchases and sales data for its only product.
Date | $840
Units Acquired at Cost
140 units @ $6.00 = | Activities | Units sold at Retail
Jan. 1 Beginning inventory
Jan. 10 Sales | 100 units @ $15.00 = $1,500
Jan. 20 Purchase | 300
60 units @ $5.00 =
Jan. 25 Sales | 80 units @ $15.00 = $1,200
Jan. 30 Purchase | 810
180 units @ $4.50 =
380 units | $1,950 | 180 units | $2,700Laker uses a perpetual inventory system. Complete comparative income statements for the month of January for Laker
Company for the four inventory methods. Assume expenses are $1,250, and that the applicable income tax rate is 40%.
For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase, 5 are from
the January 20 purchase, and 15 are from beginning inventory.
For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase,
5 are from the January 20 purchase, and 15 are from beginning inventory.
1. Which method yields the highest net income?
2. Does net income using weighted average fall between that using FIFO and LIFO?
3. If costs were rising instead of falling, which method would yield the highest net income?
Palmona Co. uses the perpetual system in accounting for merchandise inventory.
Prepare the journal entries on January 8, to both reimburse the fund and increas
the fund to $450.
Date | Debit | Credit
Jan. 8 | 74
Date | Debit | Credit
Jan. 8 | 250
Cash | 250Palmona Co. establishes a $200 petty cash fund on January 1. On January 8, the fund shows
$38 in cash along with receipts for the following expenditures:
Wright Company deposits all cash receipts on the day when they are received and it makes all cash payments by check.
Prepare a bank reconciliation for the company using the above information.
Bank statement balance $28,400 Book balance $30,100
Deposit of May 31 7,500
Bank error 530
Outstanding checks 6,900 Bank service charge 230
NSF check 340
Adjusted bank balance $29,530 Adjusted book balance $29,530
May 31, 2013d. In reviewing the bank statement, a $530 check written by Smith Company was mistakenly drawn against Wright’s account.
e. A debit memorandum for $340 refers to a $340 NSF check from a customer; the company has not yet
At the close of business on May 31, 2013, its Cash account shows a $30,100 debit balance. The company’s May 31 bank
statement shows $28,400 on deposit in the bank.
a. The May 31 bank statement included a $230 debit memorandum for bank services; the company has not yet
recorded the cost of these services.
b. Outstanding checks as of May 31 total $6,900.
c. May 31 cash receipts of $7,500 were placed in the bank’s night depository after banking hours and were not
recorded on the May 31 bank statement.
recorded this NSF check.
Exercise 6-‐9 Algorithm
Date Debit Credit
Dec. 31 4,875
Feb. 01 580
Jun. 05 580
Jun. 05 580
Prepare the journal entries of Chan to record these transactions and events of December 31, February 1, and June 5.
Apex Fitness Club uses straight-line depreciation for a machine costing $30,000, with an estimated four
year life and a $2,000 salvage value. At the beginning of the third year, Apex determines that the
machine has three more years of remaining life, after which it will have an estimated $1,300 salvage
Compute (1) the machine’s book value at the end of its second year and (2) the amount of depreciation
for each of the final three years given the revised estimates.