FATİH UNIVERSITY

FACULTY OF ECONOMIC AND ADMINISTRATIVE SCIENCES

DEPARTMENT OF MANAGEMENT & DEPARTMENT OF ECONOMICS

MAN 202 PRINCIPLES OF ACCOUNTING II

2nd MIDTERM EXAM

Instructor: Ali COSKUN

Duration: 70 Minutes May 10, 2006

(CHOOSE FIVE OF THE FOLLOWING QUESTIONS AND ANSWER)

QUESTIONS

Question 1. (20 points)

Complete the following statements about promissory notes and interest by entering amounts in the spaces provided. (Use 360 days in one year.)

(a) The interest on $100,000 for 60 days at 12% is $____________

(b) A 120-day note dated September 20 will mature on ____________

(c) If interest expense on a 15%, one-year note is $4,000, the amount of the note is $____________

Question 2. (20 points)

Nature Corporation engaged in the following treasury stock transactions during the current year:

Aug. 25 Purchased 4,000 shares of treasury stock at $50 per share

Oct. 10 Reissued 1,500 shares of the treasury stock acquired on August 25 at a price of $58 per share.

Dec. 15 Reissued 1,000 shares of treasury stock at a price of $46 per share.

Prepare the general journal entries to record these treasury stock transactions.

Question 3. (20 points)

Shown below is information relating to the stockholders' equity of Delta Waste Management at December 31, 2005:

6% cumulative preferred stock, $100 par, $ 600,000

Common stock, $10 par, 1,000,000 shares authorized, 2,000,000

Additional paid-in capital: common stock 3,000,000

Retained earnings (600,000)

(a) Number of shares of preferred stock issued and outstanding: ______________ shares

(b) Number of shares of common stock issued and outstanding: ______________ shares

(c) Average issue price per share of common stock: $____________ per share

(d) Total stockholders' equity: $______________________

(e) Dividends in arrears on preferred stock, (only 1 full year) $______________________

Question 4. (20 points)

Smart Company is a merchandising company that sells shoes. The Company uses a perpetual inventory system. The following are the selected transactions completed by the Company during April 2006:

April 10 Purchased inventory costing 1.770 YTL (18% V.A.T. included in the amount).

April 13 Paid bill for utilities expense for 354 YTL. (18% V.A.T. included in the amount)

April 22 Sold all the inventory purchased on April 10 on credit, total sales price was 1.800 YTL plus %18 V.A.T.

a) Prepare the journal entries to record each of the transactions.

b) At the end of the April make the entries to close V.A.T. Credit and V.A.T. Received to V.A.T. Matching and Close V.A.T. Matching Account to V.A.T Carried Forward Account or V.A.T. Payable.

Question 5. (20 points)

An employee of the Turan Company had a gross salary of 1,800 YTL in May 2006.

a) Prepare payroll table of the employee in May 2006.

b) Make end of the month adjusting entry to recognize the payroll liabilities related to employee.

Social Security Insurance Premium Employer’s Share is 19.5 % of gross salary

Unemployment Insurance Premium Employer’s Share is 2 % of gross salary

Social Security Insurance Premium Employee’s Share is 14 % of gross salary

Unemployment Insurance Premium Employee’s Share is 1 % of gross salary

Stamp Duty is 0.6 % of gross salary

Income Tax is 15 % of tax base for less than 7,000 YTL and 20% between 7,000 YTL and 18,000 YTL

Question 6. (20 points)

Corporation Par value Dividend Maturity value

Preferred stock Double taxation Paid-in capital Common stock

Underwriter Retained earnings

Each of the following statements may (or may not) describe one of these technical terms. In the space provided below each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms.

_______________ (a) The type of stock whose owners have little say in management of the corporation and whose annual dividend is limited to a present amount.

_______________ (b) Distribution of cash to or other company assets to the owners of a corporation.

_______________ (c) The amount that must be paid to settle a liability at the date it becomes due.

_______________ (d) The per-share value quoted daily in the financial press for all shares traded on organized exchanges, such as the New York Stock Exchange.

_______________ (e) An element of stockholders' equity arising from profitable operation of business.

_______________ (f) The type of stock most likely to increase dramatically in value if the issuing corporation is extremely successful.

_______________ (g) Amounts invested in a corporation by its stockholders.