I attached file in here. It is including 2 parts, so I need the details for both, please.

1. explain the details each topic of each chapter 1,2,3,4,5,18 and 7 (part 1)
2. solve all problems with details of how to get the answers

ACCT 3331 Topics to know for Exam I Chapter 1 & 2 - Financial Accounting Standards and Conceptual Framework Know the basic objectives financial reporting and the basic elements of financial statement Know the fundamental and enhancing qualitative characteristics of accounting information. Know the assumptions, principles and constraints of accounting information and be able to identify when each is being illustrated in specific accounting contexts. Chapter 3 - The Accounting Information System Be able to prepare and/or answer questions related to journal entries, adjusting journal entries, and closing entries. Be able to reconstruct an event or adjustment when information is missing or not given in chronological order. This may require using end of period information and cash receipt/disbursement information to reconstruct the event or adjustment needed. Chapter 4 - Income Statement Know how to format an income statement when discontinued operations are present. Know how to report unusual or infrequent items on the income statement. Be able to do the income statement reporting of discontinued operations (when discontinued operations are sold in the reporting period and when they are held for sale, both with tax effects). Know how to report noncontrolling interest. Chapter 5 - Balance Sheet and Statement of Cash Flows Be able to prepare and/or answer questions related to a classified balance sheet in good form. Know useful characteristics of the balance sheet and the limitations of the balance sheet. Know how cash flows should be labeled on the statement of cash flows (operating, investing or financing) and be able to prepare a statement of cash flows using the direct method and indirect method. Chapter 18 - Revenue Recognition Know the five-step process for revenue recognition. Know how to estimate variable consideration in order to determine transaction price and how to allocate transaction price to separate performance obligations. Accounting for long term contracts under the percentage of completion method and completed contract method of accounting for long term contracts (including scenarios with current losses or overall contract losses) 0 Chapter 7 - Cash and Receivables Accounting for cash discounts (gross and net method) Estimating and recording bad debt expense (Income statement approach and balance sheet approach with single bad debt rate or multiple bad debt rates based on age of specific receivables) Recording write-offs of actual bad debts Using the transactions that affect A/R and A.D.A to solve for an unknown amount Accounting for interest bearing notes receivable The exam will be a combination of questions requiring short written responses and problems requiring calculations and/or appropriate journal entries or financial statement presentation. You will have 2 hour to complete the exam. The following sample exam reflects a random draw of questions from the material from Chapters 1-5, Chapter 18 and Chapter 7 that you are expected to know. This sample exam is intended as a practice test to help you identify areas of weakness once you have studied all of the material listed above. The sample exam is not a guide of what to study. 1 ACCT 3331 SAMPLE EXAM 1 NAME_____________________________________________ Question I II III IV V VI VII VIII IX TOTAL Topic Conceptual Framework Adjusting entries Closing Entries Balance Sheet Presentation of Income Statement Statement of Cash Flows Revenue Recognition Long Term Contract Accounts Receivable Total Points Assigned 10 14 6 14 12 14 12 8 10 100 Your Points PLEASE NOTE: 1. This examination consists of 7 pages, including the cover page. Please check immediately to be certain that all pages are included. 2. Show all your work and calculations. I cannot give partial credit if I cannot see the work you have done. Use the margins and back of the paper for any calculations. 3. Good luck! 2 I. Conceptual Framework (10 points) REQUIRED: Provide short answers for questions 1-3 in the space provided. 1. What are the two fundamental qualitative characteristics of accounting information as defined in SFAC No. 8? 1). ______________________________________ 2). ______________________________________ 2. What are the four enhancing qualitative characteristics of accounting information as defined in SFAC No. 8? 1). ____________________________________ 2). ____________________________________ 3)._____________________________________ 4). _____________________________________ 3. Land was acquired in 2000 for a future building site at a cost of $40,000. The assessed valuation for tax purposes is $27,000, a qualified appraiser placed its value at $48,000, and a recent firm offer for the land was for a cash payment of $46,000. The land should be reported in the financial statements at what dollar amount? REQUIRED: In the space provided, give the basic assumption, broad accounting principle or pervasive constraint that applies to each statement (give only the one answer that best applies to the statement) 4. Liquidation values are not normally reported in financial statements even though many companies do go out of business. ________________________________________ 5. The Parker Corporation does not adjust the valuation of assets and liabilities to reflect changes in the purchasing power of the dollar. _________________________________________ 6. In a typical reporting period, a manufacturing company records revenue from selling a product and also records the cost of goods sold on the sale. _________________________________________ 3 II. Adjusting Entries (14 points) REQUIRED: For each situation (questions 1-5), prepare the necessary adjusting entry as of December 31, 2013. Assume that each firm adjusts and closes its books only on an annual basis. If no adjusting journal entry is necessary, then write \"no adjusting entry\" in the space provided. 1. On September 1, 2013, Carlisle Inc. paid $10,200 for a two-year fire insurance policy and debited the entire amount to insurance expense. Account name Debit Credit 2. On January 1, 2013, Darline Trucking Corp. purchased equipment for $160,000. The equipment has an 8-year useful life and no estimated residual value. Straight-line depreciation is used. Account name Debit Credit 3. On March 1, 2013, the Star Printing Company received a $45,000 payment for annual magazine subscriptions (the subscriptions run from the March, 2013 edition through the February 2014 edition). Upon receipt of the payment, Star Printing credited the amount to sales revenue. Account name Debit Credit 4. On October 1, 2013, S&P Company borrowed $100,000 from the bank. The note requires principal and interest at 11% to be paid on April 30, 2014. Account name Debit Credit 5. Aventine Corporation made sales on credit in 2013 totaling $80,000. Management estimates a bad debt rate of percent of credit sales. At January 1, 2013, the balance in allowance for doubtful accounts was a credit balance of $1,000. There were no actual bad debt write-offs in 2013. Account name Debit Credit 4 III. Closing Entries (6 points) The adjusted trial balance for Knit Right Corp. at December 31, 2013 is as follows: dr. Sales Revenue Accounts receivable Cash Prepaid rent (for 4 months remaining) Rent expense Allowance for uncollectible accounts Accounts Payable Inventory Cost of goods sold Notes payable Salaries Payable Interest Payable Salary expense Interest expense Unearned Revenue Common stock Retained earnings Equipment Accumulated depreciation Depreciation expense Totals cr. $535,000 150,000 72,000 10,000 30,000 6,000 140,000 65,000 400,000 60,000 28,000 2,000 83,000 24,000 23,000 250,000 300,000 800,000 320,000 30,000 $1,664,000 $1,664,000 REQUIRED: Prepare Closing Entries (Use an Income Summary Account) Account name Debit Credit 5 IV. The Balance Sheet (14 points) The post-closing trial balance for ABC Corp. at December 31, 2013 is as follows: Cash Accounts receivable Inventory Prepaid rent (for 4 months remaining) Equipment Accumulated depreciation Allowance for uncollectible accounts Accounts payable Unearned revenue Notes payable Salaries payable Interest payable Common stock Retained earnings Totals dr. $ 21,000 300,000 53,500 10,000 600,000 $984,500 cr. 250,000 20,000 40,000 2,800 60,000 8,000 2,700 400,000 201,000 $984,500 Additional information: The $60,000 note payable is an installment loan. $10,000 of the principal, plus 9% interest is due each July 1 until maturity. Unearned revenue relates to products that will ship in early 2014. REQUIRED: Questions 1-5 below relate to the information presented on the balance sheet of ABC as of December 31, 2013. Fill in the blank with the appropriate amount. 1. What is the amount that would be reported as total current assets on the 2013 balance sheet? Total Current Assets 2. What is the amount that would be reported as total current liabilities on the 2013 balance sheet? Total Current Liabilities 3. What is the amount that would be reported as Net Accounts Receivable on the 2013 balance sheet? Net Accounts Receivable 4. What is the amount that would be reported as total shareholders' equity on the 2013 balance sheet? Total Shareholders' Equity 5. The balance in interest payable on the 2013 balance sheet is $2,700. What amount of interest payable would be reported on the 2014 balance sheet? Interest Payable 2014 Balance Sheet V. Presentation of the Income Statement (12 points) 6 The Rayburn Company had income from continuing operations before tax of $1,575,000 in 2014. Additional pre-tax transactions not included in the computation of the $1,575,000 are as follows: 1. In 2014, Rayburn decided to sell one of its manufacturing divisions, which qualifies as a discontinued operation for financial reporting purposes. On Nov. 1, 2014, the division assets were sold for $3,250,000. On the date of the sale, the division assets had a book value of $3,750,000. The discontinued division had a loss from operations from Jan. 1, 2014 through Nov. 1, 2014 of $200,000. 2. The sale of operational equipment resulted in a loss of $57,000. 3. Rayburn acquired 70% of the outstanding stock of Koch Co. and as such, consolidates Koch Co.'s financial results with its own. Koch Co. had net income of $300,000 in 2014 REQUIRED: Use all of the information above to prepare a 2014 income statement for the Rayburn Company beginning with income from continuing operations before tax. Assume an income tax rate of 40%. Provide full disclosure on the Income Statement, but ignore EPS disclosures. $ Income from Continuing Operations, pre-tax 7 VI. Statement of Cash Flows (14 points) 1. The Bolera Company had the following cash transactions during 2014. The Bolera Company uses the direct method of presenting the Statement of Cash Flows. REQUIRED: Fill in the following table by classifying the following transactions of the Bolera Company as cash flows from operating activities, investing activities or financing activities and identifying the cash flow as an inflow or outflow. Transaction Activity Inflow or classification? Outflow? Bolera made a cash payment to reduce accounts payable Bolera received the repayment of principal on a note Bolera received a cash interest payment Bolera paid dividends to its shareholders Bolera paid salaries Bolera sold investments in equity securities of IBM Corp. 2. The Rightway Company uses the indirect method of presenting the Statement of Cash Flows. At 12/31/2014, an investigation of their 2013 and 2014 Balance Sheets reveals that the balance in Net Accounts Receivable has decreased by $100,000 from 2013 to 2014 and the balance in Accounts Payable has decreased by $75,000 from 2013 to 2014. The balance in Net Property, Plant and Equipment has decreased by $15,000 and they noted that no property, plant or equipment was purchased or sold during 2014. REQUIRED: In the space provided, prepare the Operating Cash Flow Section of the 2014 Statement of Cash Flows for the Rightway Company by providing the adjustments to reconcile net income of $850,000 to net cash flows provided by operating activities. Statement of Cash Flows Rightway Company for the Year Ended December 31, 2014 Cash Flows From Operations: Net Income Adjustments to reconcile net income to net cash provided by operating activities: $ $850,000 VII. Revenue Recognition (12 points) 8 REQUIRED: Provide answers for questions 1-4 in the space provided. 1. What is the five-step process for revenue recognition? 2. On March 1, 2003, the Star Printing Company received a $45,000 payment for annual magazine subscriptions (the subscriptions run from the March, 2003 edition through the February 2004 edition). Upon receipt of the payment, Star Printing credited the amount to sales revenue. Provide any entries necessary to correctly state sales revenue on the 2003 income statement. Account name Debit Credit 3. Peabody Construction Company enters into a contract with a customer to build a warehouse for $100,000, with a performance bonus of $50,000 that will be paid based on the timing of completion. The amount of the performance bonus decreases by 10% per week for every week beyond the agreedupon completion date. The contract requirements are similar to contracts that Peabody has performed previously, and management believes that such experience is predictive for this contract. Management estimates that there is a 60% probability that the contract will be completed by the agreed-upon completion date, a 30% probability that it will be completed 1 week late, and only a 10% probability that it will be completed 2 weeks late. How should Peabody account for this revenue arrangement? __________________________________________________________________________________ ________________________________________________________________________ 4. Handler Company is an experienced manufacturer of equipment used in the construction industry. Handler's products range from small to large individual pieces of automated machinery to complex 9 systems containing numerous components. Unit selling prices range from $600,000 to $4,000,000 and are quoted inclusive of installation and training. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Handler has the following arrangement with Chai Company. (1) Chai purchases equipment from Handler for a price of $2,000,000 and chooses Handler to do the installation. Handler charges the same price for the equipment irrespective of whether it does the installation or not. (Some companies do the installation themselves because they either prefer their own employees to do the work or because of relationships with other customers.) The price of the installation service is estimated to have a fair value of $20,000. (2) The fair value of the training sessions is estimated at $50,000. Other companies can also perform these training services. (3) Chai is obligated to pay Handler the $2,000,000 upon the delivery and installation of the equipment. (4) Handler delivers the equipment on September 1, 2014, and completes the installation of the equipment on November 1, 2014 (transfer of control is complete). Training related to the equipment starts once the installation is completed and lasts for 1 year. The equipment has a useful life of 10 years. Required: (a) What are the performance obligations for purposes of accounting for the sale of the equipment? (b) If there is more than one performance obligation, how should the payment of $2,000,000 be allocated to various components? 10 VIII. Long Term Contract (8 points) Astra Construction Company contracted to build an office building for $3,000,000. Construction began in 2003 and was completed in 2005. Data relating to the contract are summarized below: 2003 700,000 1,800,000 900,000 800,000 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 2004 980,000 1,400,000 1,100,000 1,200,000 2005 1,400,000 0 1,000,000 1,000,000 What amount of income on the long term contract would Astra report in 2003, 2004 and 2005 if the firm uses the percentage of completion method of accounting for long term contracts? 2003 2004 2005 Income on Long Term Contract 11 IX. Accounts Receivable (10 points) Platinum Pools Company has the following information reported on its 2003 comparative Balance Sheet: 2003 2002 Accounts Receivable (less allowances for doubtful $958,000 $1,027,000 accounts of $14,000 in 2003 and $17,500 in 2002) Additional information: During 2003, Platinum wrote-off $20,000 of accounts that had been identified as uncollectible. Platinum makes all sales on account and collected $2,500,000 from customers in 2003. REQUIRED: Provide answers to questions 1-4 in the space provided. 1. Provide the journal entry that Platinum made during 2003 to record the write-off. Account name Debit Credit 2. What is the amount of Platinum's 2003 credit sales? 2003 Credit Sales 3. What is the amount that Platinum recorded as bad debt expense on its 2003 income statement? 2003 Bad debt expense 4. Assuming Platinum used a balance sheet approach with a single bad debt rate (rather than multiple rates from aging specific receivables) in estimating bad debt expense, what is the bad debt rate applied in 2003? 2003 Bad debt rate 12