Please help with attached exam.

Please help with attached exam.

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ACC303
Final Exam
(Problem-based section)
(78 points)
Exam continues from the 24 question multiple choice first part of this exam.
You must complete
both parts to finish the exam.
Name ________________________________________________
Problems
25.
Indicate the effect each error would have on 2012 net income.
State whether the error causes net
income to be
overstated
(+),
understated
(

) or
NE
(no effect).
12 points
Effect on 2012
Net Income
a.
Failure to record the purchase of inventory on account.
___
b.
Expensing the purchase of equipment.
___
c.
Failure to accrue wages.
___
d.
Failure to record the allowance for uncollectible accounts.
___
e.
Collections received in advance were recorded as revenue.
___
f.
Recorded two year insurance premium as insurance
expense.
___

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26.
Iris Company decided to change from LIFO to FIFO inventory costing, effective January 1,
2012. The following data were available:
Excess of FIFO
Ending Inventory
Pretax Operating
over LIFO
Year
Income using LIFO
Ending Inventory
2012
$40,000
$8,000
2011
20,000
7,000
2010
30,000
4,000
The income tax rate is 40%. The company began operations on January 1, 2010, and has paid no
dividends since inception.
Answer the following questions relating to the 2011-2012 comparative financial statements.
Be sure to show your work. 15
points
a.
What is net incom
b.
What is restated n
c.
Prepare the 2011
2012 financial sta

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