ACC121 Fundamentals of Accounting I MIDTERM EXAM TEMPLATE – Problems W2016

ACC121 Fundamentals of Accounting I

MIDTERM EXAM TEMPLATE – Problems (W2016)

Student Name______________________________ Date____________

Each problem is worth 10 points.

1. Using the following transactions, calculate (A) the ending balance of Cash, (B) the ending balance of Accounts Receivable, (C) total liabilities, and (D) Stockholders’ Equity at the end of the period. For parts a, b, and d, indicate whether each balance is debit or credit. (Hint: Use T-Accounts)

a. Began doing business by selling shared of common stock to investors for $50,000 in cash.

b. Billed customers for services rendered, $10,000.

c. Paid for six months’ subscription in advance, $2,500.

d. Received advertising bill, to be paid next week, $500

e. Dividends of $4,000 were paid to common stock holders.

f. Received $7,500 from customers billed in b.

g. Paid half of advertising bill.

h. Received $1,000 in advance of performing a service.

ANSWER ~ You must show your work for your calculations.

2. Using the alphabetical list of account balances presented below, all of which are normal, prepare a trial balance for Cookies and Cream Company at June 30, 20x5, in proper order. Compute the balance of the Cash account.

Accounts Payable	$280
Accounts Receivable	560
Cash	?
Equipment	800
Office Expense	360
Common Stock	880
Service Revenue	600
ANS: Cookies and Cream Company Trial Balance June 30, 20x5 Cash Accounts Receivable Equipment Accounts Payable Common Stock Service Revenue Office Expense $ $

3. In the journal provided, prepare adjusting entries for the following items. Omit explanations.

a. Depreciation on machinery is $940 for the accounting period.

b. Interest incurred on a loan but not paid or recorded is $635.

c. Office supplies of $600 were on hand at the beginning of the period. Purchases of office supplies during the period totaled $200. At the end of the period, $80 in office supplies remained.

d. Commissions amounting to $540 were earned but not recorded or collected by year end.

e. Prepaid Rent had an $8,000 normal balance prior to adjustment. By year end, 40 percent had expired.

ANS:

General Journal	Page 1
Date	Description	Post. Ref.	Debit	Credit
a.	Depreciation Expense–Machinery
		Accumulated Depreciation–Machinery
b.	Interest Expense
		Interest Payable
c.	Office Supplies Expense
		Office Supplies
d.	Accounts Receivable
		Commissions Earned
e.	Rent Expense
		Prepaid Rent

4.Using the following data, prepare a classified balance sheet for Blanchard Company as of December 31, 20x5.

Cash	$ 200		Accumulated Depreciation– Building	$ 1,000
Investments in Short-Term Government Securities	400		Franchise	1,800
Accounts Receivable	800		Accounts Payable	1,600
Inventory	3,000		Revenues Received in Advance	400
Prepaid Rent	100		Notes Payable (in two years)	4,000
Investment in Land Held for future use	2,700		Common Stock	12,000
Land	2,000
Building	8,000

ANS:

Blanchard Company
Balance Sheet
December 31, 20x5
Assets
Current assets
	Cash		$
	Investments in short-term government securities
	Accounts receivable
	Inventory
	Prepaid rent
	Total current assets			$
Investments
	Land held for future use
Property, plant, and equipment
	Land		$
	Building	$
	Less accumulated depreciation
	Total property, plant, and equipment
Intangible assets
	Franchise
Total assets			$
Liabilities
Current liabilities
	Accounts payable	$
	Revenues received in advance
	Total current liabilities		$
Long-term liabilities
	Notes payable (in two years)
Total liabilities			$
Stockholders' Equity
Common stock
Total liabilities and stockholders' equity			$

5. Use the information from the following single-step income statement to prepare a multistep income statement in proper form.

Midway Industries
Income Statement
For the Year Ended December 31, 20x5
Revenues
	Net sales	$10,000
	Interest income	300
	Total revenues		$10,300
Costs and expenses
	Costs of goods sold	$ 5,000
	Selling expenses	3,000
	General and administrative expenses	1,800
	Interest expense	800
	Total costs and expense		10,600
Net income (loss)		($ 300)

ANS:

Midway Industries
Income Statement
For the Year Ended December 31, 20x5
Net sales	$
Costs of goods sold
Gross margin	$
Operating expenses
	Selling expenses	$
	General and administrative expenses
	Total operating expenses
Income from operations		$
Other revenues and expenses
	Interest income	$
	Less interest expense
	Excess of other expenses over other revenues
Net income (loss)		$