ACCT 201: Accounting Foundations I (Winter 2009) - MT

ACCT 201: Accounting Foundations I (Winter 2009) - MT

1. Prepare a December 31 balance sheet in proper form for Surety Insurance from the following items and amounts:
Commissions earned 40,000
Accounts payable 3,500
Accounts receivable 5,000
M. Bruno, Capital 103,500
Office equipment 10,000
Advertising expense 3,200
Cash 7,500
Land 35,000
Note payable 50,000
Office supplies 500
Salaries expense 12,000
Salaries payable 1,000
Building 100,000

2. Barnes Company has 20 employees who are each paid $80 per day for a 5-day workweek. The employees are paid each Friday. This year the accounting period ends on Tuesday. Prepare the December 31 year-end adjusting journal entry Barnes Company should make to accrue wages.

3. Steve's Skateboards uses the perpetual inventory system and had the following sales transactions during April:
2-Apr Sold merchandise to Happy Hobby Shop on credit for $4,800, terms 1/15, n/60. The items sold had a cost of $2,700.
4-Apr Happy Hobby Shop returned merchandise that had a selling price of $200. The cost of the merchandise returned was $110.
13-Apr Happy Hobby Shop paid for the merchandise sold on April 2, taking any appropriate discount earned.

Prepare the journal entries that Steven's Skateboards must make to record these transactions.

4. Prepare general journal entries on December 31 to record the following unrelated year-end adjustments.
a. Estimated depreciation on office equipment for the year, $4,000.
b. The Prepaid Insurance account has a $3,680 debit balance before adjustment. An examination of insurance policies shows $950 of insurance expired.
c. The Prepaid Insurance account has a $2,400 debit balance before adjustment. An examination of insurance policies shows $600 of unexpired insurance.
d. The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday. The employees were paid on Friday, December 26, and have worked full days on Monday, Tuesday, and Wednesday, December 29, 30, and 31.
e. On November 1, the company received 6 months' rent in advance from a tenant whose rent is $700 per month. The $4,200 was credited to the Unearned Rent account.
f. The company collects rent monthly from its tenants. One tenant whose rent is $750 per month has not paid his rent for December.

5. Leonard Matson completed these transactions during December of the current year:
December
1 Began a financial services practice by investing $15,000 cash and office equipment having a $5,000 value.
2 Purchased $1,200 of office equipment on credit.
3 Purchased $300 of office supplies on credit.
4 Completed work for a client and immediately received a payment of $900 cash.
8 Completed work for Acme Loan Co. on credit, $1,700.
10 Paid for the supplies purchased on credit on December 3.
14 Paid for the annual $960 premium on an insurance policy.
18 Received payment in full from Acme Loan Co. for the work completed on December 8.
27 Leonard withdrew $650 cash from the practice to pay personal expenses.
30 Paid $175 cash for the December utility bills.
30 Received $2,000 from a client for financial services to be rendered next year.

Prepare general journal entries to record these transactions.

6. A company made the following merchandise purchases and sales during the month of July:
1-Jul purchased 380 units at $15 each
5-Jul purchased 270 units at $20 each
9-Jul sold 500 units at $55 each
14-Jul purchased 300 units at $24 each
20-Jul sold 250 units at $55 each
30-Jul purchased 250 units at $30 each

There was no beginning inventory. If the company uses the first-in, first-out method and the perpetual system, what would be the cost of the ending inventory?

7. Shown below is Adventure Travel's adjusted trial balance as of the end of its annual accounting period:
Adventure Travel
Adjusted Trial Balance
12/31/2006
Dr. Cr.
Cash $25,000
Accounts Receivable 15,000
Office supplies 4,300
Office equipment 29,600
Accumulated depreciation - Office equipment $5,000
Long-term notes payable 25,000
Brady, Capital 30,260
Brady, Withdrawals 1,000
Fees earned 75,000
Salaries expense 32,800
Rent expense 16,800
Depreciation expense - Office equipment 3,960
Advertising expense 4,000
Office supplies expense 2,800
Totals $135,260 $135,260.00

a. Prepare the necessary closing entries.
b. Prepare a post-closing trial balance.

8. Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:
Assets Liabilities
Beginning of the year $114,000 $68,000
End of the year 135,000 73,000

If Josephine made no investments in the business and withdrew no assets during the year, what was the amount of net income earned by Josephine's Bakery?
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