Acct 220 midterm review questions

1. JOURNAL ENTRIES

Journalize the following business transactions in general journal form.  Identify each transaction by number.  You may omit explanations of the transactions.

    1.     Received $50,000 from stockholders.

    2.     Purchased equipment for $75,000, paying $15,000 in cash and giving a note payable for the remainder.

    3.     Paid $3,000 rent for the month.

    4.     Recorded $12,500 of services provided on account.

    5.     Paid wages of $9,500.

    6.     Received $7,000 in cash for services provided.

    7.     Collected $2,000 from customers on account.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2. ADJUSTING ENTRIES

A review of the ledger of Wilde Co. at December 31, 2014, produces the following data pertaining to the preparation of annual adjusting entries:

(a)   Salaries and Wages Payable $0: Salaries are paid every Friday for the current week. Five employees receive a weekly salary of $800, and three employees earn a weekly salary of $700. December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days of December.

(b)   Unearned Rent Revenue $58,000: The company had several lease contracts during the year as shown below:

                                                                Rent

                                         Term                per       Number of

                 Date           (in months)         lease         leases

               Oct. 1                12               $  8,000           3

               Dec. 1               12                 18,000           2

 

(c)  Notes Receivable $90,000: This is a 6-month note, dated November 1, 2014, with a 6% interest rate.

 

Instructions:

Prepare the adjusting entries at December 31, 2014. Show all computations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. INVENTORY COMPUTATIONS

 

Lan Enterprises uses a periodic inventory system for buckets it sells. It had a beginning inventory on April 1 of 80 units at a cost of $6 per unit. During April, the following purchases and sales were made.

 

                    Purchases                                                     Sales                

April   7              60     units at $7.00                April   5            120     units at $20

        13            120     units at $7.50                        11              90     units at $20

        23              90     units at $8.00                        20              80     units at $20

        29              50     units at $8.80                        30              40     units at $20                                                       320                                                                        330

 

Instructions: Compute the April 30 ending inventory and April cost of goods sold under (a) average cost, (b) FIFO, and (c) LIFO. Provide appropriate supporting calculations.

 

(1)   Average – Ending Inventory = $_________;       Cost of Goods Sold = $_________.

 

 

 

 

 

 

 

 

 

 

 

(2)   FIFO – Ending Inventory = $_________;            Cost of Goods Sold = $_________.

 

 

 

 

 

 

 

 

 

 

 

 

(3)   LIFO – Ending Inventory = $_________;            Cost of Goods Sold = $_________.

 

 

 

 

 

 

 

 

 

 

4. RATIOS

Sanders Enterprises reported the following information for 2014:

 

      Beginning inventory                                                        $ 32,000

      Cost of goods sold                                                           404,000

      Ending inventory                                                                45,000

      Net income                                                                        28,000

      Net sales                                                                          750,000

      Operating expenses                                                         220,000

      Sales revenue                                                                  765,000

 

Instructions: Compute each of the following ratios:

(1)   Gross profit rate

(2)   Inventory turnover

(3)   Days in inventory

(4)   Profit margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5. Multiple-Step Income Statement

Below is a partial listing of the adjusted account balances of Barnett Cabinets at year-end on December 31, 2014:

Accounts receivable                                                                        $  24,000

Cost of goods sold                                                                             256,000

Selling expenses (includes depreciation)                                            48,000

Interest expense                                                                                    3,000

Accumulated depreciation—Building                                                  15,000

Sales discounts                                                                                      5,000

Inventory                                                                                              52,000

Administrative expenses (includes depreciation)                                65,000

Sales revenue                                                                                    418,000

Accounts payable                                                                                34,000

Interest revenue                                                                                        500

Instructions: Using whatever data you believe appropriate, prepare a multiple-step income statement for the Barnett Cabinets for the year ended December 31, 2014.

 

 

 

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