Questions -
Question 1: The bookkeeper for Oglesby Company asks you to prepare the following accrued adjusting entries at December 31.
1. Interest on notes payable of $400 is accrued.
2. Services provided but not recorded total $1,500.
3. Salaries earned by employees of $900 have not been recorded.
Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries Expense, and Salaries Payable.
Question 2: The trial balance of ?air Company includes the following balance sheet accounts. Identify the accounts that may require adjustment. For each account that requires adjustment, indicate (a) the type of adjusting entry (prepaid expenses, unearned revenues, accrued revenues, and accrued expenses) and (b) the related account in the adjusting entry.
Question 3: Emil Skoda Company had the following adjusted trial balance.
Emil Skoda Company Adjusted Trial Balance For the Month Ended June 30, 2010
Adjusted Trial Balance
Account Titles Debits Credits
Cash $3,712
Account Receivable 3,904
Supplies 480
Accounts Payable $1.792
Unearned Revenue 160
Emil Skoda, Capital 5,760
Emil Skoda, Drawing 300
Service Revenue 4,064
Salaries Expense 1,344
Miscellaneous Expense 256
Supplies Expense 2.228
Salaries Payable 448
$12,224 $12.224
Instructions -
(a) Prepare closing entries at June 30, 2010
(b) Prepare a post- closing trial balance.
Question 4: The adjusted trial balance for Karr Bowling Alley at December 31,2010, contains the Following accounts.
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Debits
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Credits
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|
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Building
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$128,800
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Sue Karr, Capital
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$115,000
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Accounts Receivable
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14,520
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Accumulated Depreciation-Building
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42,600
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Prepaid Insurance
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4,680
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Accounts Payable
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12,300
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Cash
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18,040
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Note Payable
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97,780
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Equipment
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62,400
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Accumulated Depreciation-Equipment
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18,720
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Land
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64,000
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Interest Payable
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2,600
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Insurance Expense
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780
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Bowling Revenues
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14,180
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Depreciation Expense
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7,360
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$303,180
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Interest Expense
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2,600
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|
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$303,180
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|
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Instructions -
(a) Prepare a classified balance sheet; assume that $13,900 of the note payable will be paid in 2011.
(b) Comment on the liquidity of the company.
Question 5: On June 10, Meredith Company purchased $8,000 of merchandise from Leinert Company, FOB shipping point, terms 2/10, n/30. Meredith pays the freight costs of $400 on June 11. Damaged goods totaling $300 are returned to Leinert for credit on June 12. The scrap value of these goods is $150. On June 19, Meredith pays Leinert Company in full, less the purchase discount. Both companies use a perpetual inventory system.
Instructions -
(a) Prepare separate entries for each transaction on the books of Meredith Company.
(b) Prepare separate entries for each transaction for Leinert Company. The merchandise purchased by Meredith on June 10 had cost Leiner $5,000
Question 6: Presented below are transactions related to Wheeler Company.
1. On December 3, Wheeler Company sold $500,000 of merchandise to Hashmi Co., terms 2/10, n/30, FOB shipping point. The cost of the merchandise sold was $350,000.
2. On December 8, Hashmi Co. was granted an allowance of $27,000 for merchandise purchased on December
3. On December 13, Wheeler Company received the balance due from Hashmi Co.
Instructions -
(a) Prepare the journal entries to record these transactions on the books of Wheeler Company using a perpetual inventory system.
(b) Assume that Wheeler Company received the balance due from Hashmi Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.
Question 7: Presented below is information for Obley Company for the month of March 2010.
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Cost of goods sold
Freight-out
Insurance expense
Salary expense
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$212,000 Rent expense
7,000 Sales discounts
12,000 Sales returns and allowance:
58,000 Sales
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$ 32,000
8,000
13,000
370,000
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Instructions -
(a) Prepare a multiple-step income statement.
(b) Compute the gross profit rate.
Question 8: Alvamar Company has the following data for the weekly payroll ending January 31.
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Employee
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M
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T
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W
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T
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F
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S
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Hourly Rate
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Federal Income Tax Withholding
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Health Insurance
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M. Hashmi
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8
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8
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9
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8
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10
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3
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$12
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$34
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$10
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E. Benson
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8
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8
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8
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8
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8
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2
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13
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37
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25
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K. Kern
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9
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10
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8
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8
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9
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0
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15
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58
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25
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Employees are paid 1 1/2 times the regular hourly rate for all hours worked in excess of 40 hours per week. FICA taxes are 8 % on the first $100,000 of gross earnings. Alvamar Company is subject to 5.4% state unemployment taxes and 0.8% federal unemployment taxes on the first $7,000 of gross earnings.
Instructions -
(a) Prepare the payroll register for the weekly payroll
(b) Prepare the journal entries to record the payroll and Alvamar's payroll tax expense.
Question 9: On January 1,2010, the ledger of Mane Company contains the following liability accounts.
Accounts Payable $52,000
Sales Taxes Payable 7,700
Unearned Service Revenue 16,000
During January the following selected transactions occurred.
Jan. 5 Sold merchandise for cash totaling $22,680, which includes 8% sales taxes.
Jan. 12 Provided services for customers who had made advance payments of $10,000. (Credit Service Revenue.)
Jan. 14 Paid state revenue department for sales taxes collected in December 2009 ($7,700).
Jan. 20 Sold 800 unite of a new product on credit at $50 per unit, plus 8% sales tax. This new product is subject to a 1-year warranty,
Jan. 21 Borrowed $18,000 from UCLA Bank on a 3-month, 8%, $18,000 note.
Jan. 25 Sold merchandise for cash totaling $12,420, which includes 8% sales taxes.
Instructions -
(a) Journalize the January transactions.
(b) Journalize the adjusting entries at January 31 for (1) the outstanding notes payable, and (2) estimated warranty liability, assuming warranty costs are expected to equal 7% of sales of the new product. (Hint: Use one-third of a month for the UCLA Bank note.)
(c) Prepare the current liabilities section of the balance sheet at January 31, 2010. Assume no change in accounts payable.
Question 10: The controller of Scheller Company is applying the lower-of-cost-or-market basis of valuing its ending inventory. The following information is available:
Cost Market
Lawnmowers:
Self-propelled $15,000 $17,000
Push type 19,000 18,000
Total 34,000 35,000
Snowblowers:
Manual 30,000 31,000
Self-start 19,000 21,000
Total 49,000 52,000
Total inventory $83,000 $87,000
Instructions - Compute the value of the ending inventory by applying the lower-of-cost-or-market basis.
Question 11: 1. Laymon Boat Company's bank statement for the month of September showed a balance per bank of $7,000. The company's Cash account in the general ledger had a balance of $5,459 at September 30. Other information is as follows:
(1) Cash receipts for September 30 recorded on the company's books were $5,700 but this amount does not appear on the bank statement.
(2) The bank statement shows a debit memorandum for $40 for check printing charges.
(3) Check No. 119 payable to Mann Company was recorded in the cash payments journal and cleared the bank for $248. A review of the accounts payable subsidiary ledger shows a $36 credit balance in the account of Mann Company and that the payment to them should have been for $284.
(4) The total amount of checks still outstanding at September 30 amounted to $6,000.
(5) Check No. 138 was correctly written and paid by the bank for $409. The cash payment journal reflects an entry for Check No. 138 as a debit to Accounts Payable and a credit to Cash in Bank for $490.
(6) The bank returned an NSF check from a customer for $360.
(7) The bank included a credit memorandum for $1,560 which represents collection of a customer's note by the bank for the company; principal amount of the note was $1,500 and interest was $60. Interest has not been accrued.
Instructions -
(a) Prepare a bank reconciliation for Laymon Boat Company at September 30.
(b) Prepare any adjusting entries necessary as a result of the bank reconciliation.
Question 12: An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct.
Dec. 17 Cash 2,940
Sales Discounts 60
Accounts Receivable 3,000
(To record collection of 12/4 sales, terms 2/10, n/30)
Dec. 20 Cash 18,360
Notes Receivable 18,000
Interest Revenue 360
(Collection of $18,000, 8%, 90 day note dated Sept. 21. Interest had been accrued through Nov. 30.)
Dec. 27 Cash 1,000
Bad Debts Expense 1,000
(Collection of account previously written off as uncollectible under allowance method)
Dec. 31 Bad Debts Expense 600
Allowance for Doubtful Accounts 600
(To recognize estimated bad debts based on 1% of net sales of $600,000)
Instructions: Prepare the correcting entries.
Question 13: Koch Company owns equipment that cost $100,000 when purchased on January 1, 2007. It has been depreciated using the straight-line method based on estimated salvage value of $10,000 and an estimated useful life of 5 years.
Instructions - Prepare Koch Company's journal entries to record the sale of the equipment in these four independent situations.
(a) Sold for $56,000 on January 1, 2010.
(b) Sold for $56,000 on May 1, 2010.
(c) Sold for $22,000 on January 1, 2010.
(d) Sold for $22,000 on October 1, 2010.
Question 14: On March 1, Jordan Company borrows $90,000 from Ottawa State Bank by signing a 6-month, 8%, interest-bearing note.
Instructions
Prepare the necessary entries below associated with the note payable on the books of Jordan Company.
(a) Prepare the entry on March 1 when the note was issued.
(b) Prepare any adjusting entries necessary on June 30 in order to prepare the semi-annual financial statements. Assume no other interest accrual entries have been made.
(c) Prepare the adjusting entry at August 31 to accrue interest.
(d) Prepare the entry to record payment of the note at maturity.
Question 15: The MFP Partnership is to be liquidated when the ledger shows the following:
Cash $ 50,000
Noncash Assets 200,000
Liabilities 50,000
Moss, Capital 75,000
Fairly, Capital 100,000
Pratt, Capital 25,000
Moss, Fairly, and Pratt's income ratios are 6:3:1, respectively.
Instructions - Prepare separate entries to record the liquidation of the partnership assuming that the noncash assets are sold for $150,000 in cash.