Practice Midterm Exam Summary

EXAM INSTRUCTIONS

• Duration: 75 minutes

• Must use a pen for exam completion.

• Closed book and notes, one 8.5x11" cheat sheet allowed.

• Basic calculator allowed; laptops for calculation only, no internet access.

• No questions allowed during the exam.

• Check for 15 pages in the exam booklet.

• Follow Kellogg honor code strictly.

ACCOUNTS RECEIVABLE (22 POINTS)

• Gross Accounts Receivable: $45,883,000 (12/31/2019)

• Allowance for Doubtful Accounts:

  • 2019: $3,510,000

  • Bad Debt Expense for 2019: To be calculated for specific cases.

  • Writing off accounts does not affect total assets/net income (previous allowance recorded).

INVENTORY (14 POINTS)

• Conoco Phillips Inventory Methods: FIFO, LIFO, Average Method.

• Under LIFO, ending inventory is lower, COGS is higher; under FIFO, it’s the opposite.

PP&E (14 POINTS)

• Gross PP&E for HP at end of 2012: $13,929 million

• Depreciation expense includes figures for past years; asset impairment to be calculated.

ACCOUNTING MECHANICS (16 POINTS)

• Axe Capital financials:

  • Assets: $1,513,011

  • Liabilities + SE: $1,513,011

• January activities include:

  • New inventory bought: $218,500 on credit.

  • Revenue total for January: To be calculated.

  • Net income for January = Revenues - Expenses.