Advanced Intermediate

Accounting I

Final Exam

Name:

Problems:

a)      Fixed asset market price

b)      Cost of tearing down an old building

c)      Severance pay for employees dismissed because of acquisition

d)     Cost of tearing down a building on newly acquired land

e)      Cost of training new employees

f)       Installation costs

g)      Replacement of an electric motor in a machine

h)      Expansion of the heating/cooling system

i)        Freight costs

j)        Cost of insurance during construction

k)      Testing costs

l)        Costs of grading land prior to construction

m)    Tax assessment for city improvements

n)      Landscaping costs

(20 points)

Prepare the two journal entries to record the payment of the payroll and the accrual of its payroll taxes for April. Assume an 8% F. I. C. A. rate for both employees and the employer. Also assume a 5.4% state unemployment tax rate, a 0.6% federal unemployment tax rate, and that all wages are subject to all payroll taxes. Round all answers.

Date

Accounts

D

C

(20 points)

Employees

Hourly Wage

Hours Worked

Cumulative Earnings

Al.  Angel

$45.00

38

$99,800

Bert Bayo

$18.00

43

$6,100

Claudia Cooper

$17.00

40

5,700

Danielle Donovan

$43.00

48

110,000

Over time is paid at 1 ½ times of the regular hourly wage. Assume there are no voluntary contributions.

The following are the current information about tax liabilities:

Tax

Rate

Ceiling

Social Security

6.0%

$100,000

Medicare

1.50%

N/A

SUTA

5%

$7,000

FUTA

1%

7,000

Additional Information: Federal Income taxes will be equal to 20% of the total weekly earnings.

Compute:

a.                                                                                                                                                                                           Total Social Security Payable

b.                                                                                                                                                                                          Total Medicare Payable

c.                                                                                                                                                                                           Total SUTA Payable

d.                                                                                                                                                                                          Total FUTA Payable

e.                                                                                                                                                                                           Total Federal Income Tax Payable

Round all answers.

(20 points)

Name

XPA 234

Total Cost

$261,000

Useful Life

5 years

Residual Value

$11,000

Total Working Hours Capacity

18,000 hours

Calculate the following:

b.      The amount of depreciation for the year 2004 using the straight line method. (5 points)

c.       The depreciation for 2005 using the hours of operation depreciation method (same as the units of production method), knowing that the machine worked 4,300 hours during that year. (5 points)

c.   Create a depreciation schedule for all years, using the double declining 

      method. Do not depreciate below the residual value. (5 points)

d. Create a depreciation schedule for all years, using the sum of the years  

      method. (5 points)

For each situation, prepare the journal entry ( if any) on December 31, 2013, to record the information for Fallon. If no journal entry is recorded, explain how the information would be disclosed in Fallon’s 2013 annual report.

Date

Accounts

D

C

(20 points)

Bonus Question: (10 points)

How would your answers change if Fallon, the company in the previous question, used IFRS instead of GAAP standards?       

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