ACCTG 211 Final: ACCTG211 Exam 1 2017 Fall

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ACCTG!211!–!Exam!1!–!Practice!Exam!Solutions!

1. B!–!Historical!cost!

2. (1)!Analyze!transactions!and!create!journal!entries,!(2)!poster!journal!entries!to!ledger!

accounts,!(3)!Balance!ledger!accounts!and!transfer!balances!to!unadjusted!trial!balance!

3. C!–!The!income!statement!is!prepared!first!because!you!need!net!income!to!create!the!

statement!of!shareholders’!equity,!which!is!the!2nd!statement!that!is!prepared.!

4. A!–!They!increase!retained!earnings!in!the!shareholders’!equity!section.!This!is!why!we!

always!credit!revenues.!

5. C!–!The!balance!sheet!in!the!current!assets!section.!Money!a!company!is!owed!is!

referred!to!as!accounts!receivable.!

6. C!–!$450,000!because!we!need!to!increase!the!sales!revenue!of!$420,000!by!$30,000!to!

account!for!the!previously!unearned!revenue.!

7. A!–!$14,000!because!we!need!to!reduce!the!balance!of!the!unearned!revenue!account!

by!$30,000!since!the!revenue!is!now!earned.!

8. A!–!$100!because!the!adjusted!balance!of!the!supplies!account!is!what!is!left!in!the!

supplies!account!at!the!end!of!the!period.!We!were!given!this!value!because!we!were!

told!we!had!$100!of!unused!supplies.!

9. B!–!$17,600!

Monthly!Ins!Exp!=!$22,000!/!10!=!$2,200!

Two!months!have!passed!since!the!policy!was!purchased!on!2/1.!

Ins!Exp!=!$2,200!x!2!=!$4,400!

Prepaid!Ins!=!$22,000!–!$4,400!=!$17,600!

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10. D!–!$4,250.!The!wages!payable!account!will!increase!by!the!amount!earned!but!not!paid!

to!employees!during!the!current!pay!period.!

Wages!payable!=!$3,000!+!$1,250!

Wages!payable!=!$4,250!

11. B!–!$4,000.!Interest!payable!will!increase!by!the!amount!of!the!interest!expense!for!the!

year.!

Interest!expense!=!$100,000!x!0.04!

Interest!expense!=!$4,000!

12. B!!–!$16,000!

Depreciation!expense!=!($100,000!–!$20,000)!/!5!

Depreciation!expense!=!$16,000!!

13. (1)!Determine!required!adjustments!and!create!adjusting!journal!entries,!(2)!Post!

adjusting!entries!to!ledger!accounts,!(3)!Rebalance!ledger!accounts!and!transfer!

balances!to!adjusted!trial!balance!

14. A!–!Debit!operating!expenses!$35,000;!Credit!cash!$35,000.!We!debit!operating!

expenses!because!expenses!reduce!shareholders!equity.!This!is!also!why!we!always!

debit!expenses.!We!credit!cash!because!it!is!an!asset!that!is!decreasing.!

Assets!

Liabilities!

Shareholders'!equity!

Contributed!

capital!

Retained!!!!!!!!

earnings!

!($35,000)!cash!

($35,000)!

operating!

expenses!

15. D!-!This!represents!the!Going-Concern!assumption.!If!a!company!has!long-term!assets!

on!its!balance!sheet,!it!is!assumed!it!will!continue!its!operations!for!future!periods.!

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16. C!–!For!this!problem!you!will!need!to!find!Ferro!Co.’s!retained!earnings!for!this!year!then!

add!the!retained!earnings!for!the!year!to!the!beginning!balance!of!the!retained!earnings!

account!because!retained!earnings!is!a!continuously!increasing!account.!

Retained!earnings!for!the!year!=!Net!income!–!Dividends!

Retained!earnings!for!the!year!=!$80,000!-!$50,000!=!$30,000!

Total!retained!earnings!=!Beginning!retained!earnings!+!Retained!earnings!for!the!year!

Total!retained!earnings!=!$10,000!+!$30,000!=!$40,000!

17. No!effect!on!net!income!–!We!can!see!neither!revenues!nor!expenses!are!impacted!by!

the!transaction!below.!

Assets!

Liabilities!

Shareholders'!equity!

Contributed!

capital!

Retained!!!!!!!!

earnings!

($2,000)!cash!

$2,000!prepaid!

insurance!

18. Decrease!cash!flows!–!We!can!see!cash!decreases!in!the!transaction!below.!

Assets!

Liabilities!

Shareholders'!equity!

Contributed!

capital!

Retained!!!!!!!!

earnings!

($2,000)!cash!

$2,000!prepaid!

insurance!

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Document Summary

This is why we always credit revenues: c the balance sheet in the current assets section. We were given this value because we were told we had of unused supplies: b ,600. Monthly ins exp = ,000 / 10 = ,200. Two months have passed since the policy was purchased on 2/1. Ins exp = ,200 x 2 = ,400. Prepaid ins = ,000 ,400 = ,600: d ,250. The wages payable account will increase by the amount earned but not paid to employees during the current pay period. Wages payable = ,250: b ,000. Interest payable will increase by the amount of the interest expense for the year. Interest expense = ,000: b ,000. Depreciation expense = (,000 ,000) / 5. We debit operating expenses because expenses reduce shareholders equity. This is also why we always debit expenses. Retained earnings (,000) operating expenses: d - this represents the going-concern assumption.

Related Questions

QUESTION 5 Which of the following statements BEST definesfinancial statements? A. Financial statements are plans andforecasts for future time periods. B. Financial statements are theverbal statements made to business news organizations by chieffinancial officers. C. Financial statements are documents thatreport on a business in monetary terms, providing information tohelp people make informed business decisions. D. Financialstatements are the information systems that record and measurebusiness transactions.

QUESTION 6 Which of the following statements is true of a trialbalance? A. A trial balance has the same format as a balance sheet.B. A trial balance presents data in debit and credit format. C. Atrial balance shows total amounts of assets, liabilities, but notequity. D. A trial balance is prepared after the balance sheet.

QUESTION 7 There are relatively few types of revenue. Which ofthe following in NOT a type of revenue? A. Sales B. Service C.Interest D. Unearned Revenue

QUESTION 8 The financial statements should be prepared in whatorder? A. Income statement, statement of owner's equity, balancesheet, statement of cash flows B. Balance sheet, statement ofowner's equity, income statement, statement of cash flows C.Statement of owner's equity, balance sheet, income statement,statement of cash flows D. Balance sheet, income statement,statement of owner's equity, statement of cash flows

QUESTION 9 Which of the following journal entries would berecorded if a business makes a cash payment to a supplier of $600"on account" (the business had purchased supplies on account in theprevious month)? A. Accounts payable 600 Cash 600 B. Accountspayable 600 Supplies 600 C. Cash 600 Supplies 600 D. Cash 600Accounts payable 600

QUESTION 10 Which of the following statements about revenue isCORRECT? A. Revenues increase owner's equity, so a revenueaccount's normal balance is a credit balance. B. Revenues decreaseowner's equity, so a revenue account's normal balance is a debitbalance. C. Revenues increase owner's equity, so a revenueaccount's normal balance is a debit balance. D. Revenues decreaseowner's equity, so a revenue account's normal balance is a creditbalance.

QUESTION 11 From a legal perspective, a proprietorship is: A.not a distinct entity from its proprietor. B. authorized understate charter. C. an entity separate from its proprietor. D.subject to regulation by the SEC.

QUESTION 12 Sharon Samson starts a plumbing service namedReliable Waterworks. Selected transactions are described asfollows: A) Sharon deposits $7,000 into a new checking account forthe business, recording the capital contribution. B) Reliable pays$4,000 cash for equipment to be used for plumbing repairs. C)Reliable borrows $15,000 from a local bank and deposits the moneyin the checking account. D) Reliable pays $600 rent for the firstmonth. E) Reliable pays $400 cash for plumbing supplies to be usedon various jobs in the future. F) Reliable completes a plumbingrepair project for a local lawyer and receives $1,300 cash. G)Sharon takes a cash withdrawal of $2,500. After all of thetransactions, what is the amount of total assets? A. $25,700 B.$20,200 C. $24,200 D. $5,200

QUESTION 13 The Accounts Payable account is a(n) ________account and carries a ________ normal balance. A. liability; debitB. asset; debit C. liability; credit D. asset; credit

QUESTION 14 The following are the ending month's balances forToys Galore. Accounts payable $6,790 Revenue $8,680 Cash $4,500Expenses $1,050 Furniture $8,370 Accounts receivable $ 7,710Capital $930 Notes payable $5,230 What is the total amount ofcredits for the trial balance? A. $30,310 B. $16,400 C. $21,630 D.$20,580

QUESTION 15 The Sarbanes-Oxley Act ("SOX") made it a criminaloffense to: A. steal shareholders' money. B. default on loans fromcreditors. C. declare bankruptcy. D. falsify financialinformation.

QUESTION 16 Which of the following is the order of steps tojournalize an entry? A. Record the transaction, identify eachaccount affected, determine increase or decrease in each account.B. Identify each account affected, determine increase or decreasein each account, record the transaction. C. Identify each accountaffected, record the transaction, determine increase or decrease ineach account. D. Determine increase or decrease in each account,identify each account affected, record the transaction

QUESTION 17 Mitchell Florists had the following total assets,liabilities, and equity as of December 31. Assets $450,000Liabilities 135,000 Equity 315,000 What is Mitchell's debt ratio asof December 31? A. 30% B. 70% C. 100% D. 43%

QUESTION 18 Which of the following financial statements reportsrevenues? A. Statement of cash flows B. Income statement C.Statement of owner's equity D. Balance sheet

QUESTION 19 Following is a list of account balances (except forowner's capital) of Wilson Mowing Service as of December 31 of thefirst year of operation: Accounts receivable $2,500 Accountspayable $3,500 Salary expense $4,500 Repairs expense $800 Truck$8,500 Equipment $6,300 Notes payable $8,200 Cash $6,800 Suppliesexpense $1,600 Service revenue $31,900 Gasoline expense $3,800Salary payable $200 The proprietor, J.D. Wilson, contributed $3,000at the beginning of the year; during the year, the proprietor took$12,000 in drawings. At the end of the year, what is net income? A.$11,900 B. $21,200 C. $24,100 D. $12,200

QUESTION 20 Which of the following is an asset account? A.Salaries Expense B. Accounts Payable C. Service Revenue D. PrepaidExpense

QUESTION 21 A journal entry for a $75 payment for Rent expensewas posted as a debit to Salary expense and a credit to Cash. Thiserror will cause which of the following conditions on the trialbalance? A. The sum of the credits will equal the sum of thedebits. B. The sum of the debits will exceed the sum of the creditsby $75. C. The sum of the credits will exceed the sum of the debitsby $150. D. The sum of the debits will exceed the sum of thecredits by $150.

QUESTION 22 The business receives cash from a customer that isowed to the company "on account," based on services rendered to thecustomer previously. How does the collection of the cash affect theaccounting equation? A. Assets increase; owner's equity increases.B. Assets increase; liabilities increase. C. Assets decrease;owner's equity decreases. D. One asset increases; one assetdecreases

QUESTION 23 A business completes service to a client and sendsout a sales invoice. The amount will be collected from the customerat a later time. Which of the following would be TRUE at the timewhen the invoice is sent out? A. Total assets will decrease. B. Netincome will increase. C. Owner's equity will decrease. D. Totalliabilities will increase.

QUESTION 24 Which of the following accounts increases with adebit? A. Cash B. Interest Payable C. Accounts Payable D. Smith,Capital

QUESTION 25 The Accounts Receivable account of Nuptials Inc. isshown below. Accounts Receivable Dr Cr 26,000 3,500 5,000 Calculatethe ending balance of the account. A. $33,500 debit B. $31,000,debit C. $3,500, credit D. $27,500, debit

QUESTION 26 The following transactions for the month of Marchhave been journalized and posted to the proper accounts. Mar. 1Martinez invested $9,000 cash in his new design services business.Mar. 2 Paid the first month's rent of $800. Mar. 3 Purchasedequipment by paying $3,000 cash and executing a note payable for$5,000. Mar. 4 Purchased office supplies for $750 cash. Mar. 5Billed a client for $10,000 of design services completed. Mar. 6Received $8,000 on account for the services previously recorded.What is the balance in Cash? A. $13,250 B. $12,450 C. $15,450 D.$14,000

QUESTION 27 Which of the following sequences states the order inwhich a trial balance lists accounts? A. Equity â Assets âLiabilities B. Liabilities â Assets â Equity C. Assets â Equity âLiabilities D. Assets â Liabilities â Equity

QUESTION 28 Which of the following statements is FALSE? A. Atrial balance shows total amounts for assets, liabilities, andequity. B. A trial balance is created before the balance sheet isprepared. C. A trial balance presents data in debit and creditformat, but a balance sheet does not. D. A trial balance showstotal debits and total credits.

QUESTION 29 A promise received from a business's customers topay for goods and services that they received from the business iscalled a(n): A. revenue. B. account receivable. C. account payable.D. expense.

QUESTION 30 You can evaluate the economic resources, debt, andoverall financial position of a company in which of the followingfinancial statements? A. Income statement B. Balance sheet C.Statement of owner's equity D. Statement of cash flows

QUESTION 31 A book holding all of the accounts is called the: A.income statement. B. journal. C. ledger. D. balance sheet.

QUESTION 32 Which of the following groups of accounts BOTHnormally have a debit balance? A. Assets and Liabilities B.Liabilities and Owner's equity C. Revenues and Expenses D. Assetsand Expenses

QUESTION 33 A business buys $500 of supplies on account. Whichaccount is debited? A. Supplies B. Cash C. Service revenue D.Accounts payable

On November 1, 2012 the following were the account balances ofSolo Sales and Service, Inc. The perpetual inventory method isused.

	Debits		Credits
Cash	$4,795	Accumulated depreciation	$1,000
Accounts Receivable	2,320	Accounts Payable	6,800
Supplies	1,000	Unearned Service Revenue	400
Equipment	40,000	Salaries Payable	550
		Common Stock	11,000
		Retained Earnings	28,365
	$48,115		$48,115

During November the followingsummary transactions were completed.

Nov. 8	Paid $1,150 for salaries due employees, of which $550 is forOctober salaries payable and $600 is for November.
10	Received $1,400 cash from customers in payment of account.
11	Purchased merchandise on account from Midwest Wholesale Supplyfor $6,000, terms 2/10, n/30.
12	Sold merchandise on account for $4,500, terms 2/10, n/30. Thecost of the merchandise sold was $3,000.
15	Received credit from Midwest Wholesale Supply for merchandisereturned $200.
19	Received collections in full, less discounts, from customersbilled on sales of $4,500 on November 12.
20	Paid Midwest Wholesale Supply in full, less discount. (Donâtforget the return on the 15^th.)
22	Received $1,300 cash for services performed in November.
25	Purchased equipment on account $3,000.
27	Purchased supplies on account $1,300.
28	Paid creditors $2,500 of accounts payable due.
29	Paid November rent $300.
29	Paid salaries $1,100.
29	Performed services on account and billed customers for servicesprovided $1,900.
29	Received $550 from customers for services to be provided in thefuture.

Adjustment data:

1.	Supplies on hand are valued at $1,600.
2.	Accrued salaries payable as of 11/30 are $500.
3.	Depreciation for the month is $750.
4.	$650 of the unearned service revenue has not been earned bymonth end.

Instructions

Print out the solution pages for thegeneral ledger, journal and worksheet that follow and enter thefollowing transactions (might be a good idea to use pencil):

Enter the November 1 balances in ledger accounts. Use T accountsprovided on the next page.

Enter the November transactions (not adjusting entries untilrequirement âeâ) in the general journal provided on the nextpage.

Post to the ledger accounts. You will need to add someaccounts.

Prepare an unadjusted trial balance at November 30 and enter onthe worksheet. Then complete the other worksheet columns. (Seebelow.)

Worksheetrequirement: Using your unadjusted trial balance fromabove instructions and the data for adjusting entries, prepare a 10column worksheet similar to the one in the chapter 4 appendix ofyour text.

Journalize and post adjusting entries.

Prepare a multi-step income statement and aretained earnings statement for November and aclassified balance sheet at November 30. Use yourown paper. (No formatted sheets are supplied as we did for theother items.) These statements must be properlytitled/formatted.

Journalize and post closing entries.

salmonlizard423

I have already answered questions 1 and 2, I don't need help with those. I posted those for the information in case you need it for the other questions.

[The following information applies to the questions displayed below.]

Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $10. At the start of January 2015, VGCâs income statement accounts had zero balances and its balance sheet account balances were as follows:


Cash	$	2,360,000
Accounts Receivable		152,000
Supplies		19,100
Equipment		948,000
Land		1,920,000
Building		506,000
Accounts Payable		109,000
Unearned Revenue		152,000
Notes Payable (due 2018)		80,000
Common Stock		2,200,000
Retained Earnings		3,364,100

In addition to the above accounts, VGCâs chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense.

Required:

1.	Analyze the effect of the January transactions (shown below) on the accounting equation, and indicate the account, amount, and direction of the effect (+ for increase and â for decrease) of each transaction. (Enter any decreases to account balances with a minus sign.)

a.	Received $52,250 cash from customers for subscriptions that had already been earned in 2014.
b.	Received $235,000 cash from Electronic Arts, Inc. for service revenue earned in January.
c.	Purchased 10 new computer servers for $41,900; paid $12,000 cash and signed a three-year note for the remainder owed.
d.	Paid $15,600 for an Internet advertisement run on Yahoo! in January.
e.	Sold 10,100 monthly subscriptions at $10 each for services provided during January. Half was collected in cash and half was sold on account.
f.	Received an electric and gas utility bill for $5,900 for January utility services. The bill will be paid in February.
g.	Paid $310,000 in wages to employees for work done in January.
h.	Purchased $5,100 of supplies on account.
i.	Paid $5,100 cash to the supplier in (h).

	Assets		=	Liabilities		+	Stockholdersâ Equity
a.	Cash	52,250
	Accounts Receivable	(52,250)
b.	Cash	235,000					Service Revenue	235,000
c.	Equipment	41,900
	Cash	(12,000)		Notes Payable (long-term)	29,900
d.	Cash	(15,600)					Advertising Expense	(15,600)
e.	Cash	50,500					Service Revenue	101,000
	Accounts Receivable	50,500
f.				Accounts Payable	5,900		Utilities Expense	(5,900)
g.	Cash	(310,000)					Salaries and Wages Expense	(310,000)
h.	Supplies	5,100		Accounts Payable	5,100
i.	Cash	(5,100)		Accounts Payable	(5,100)

2.	Prepare journal entries for the January transactions listed in part 1, using the letter of each transaction as a reference. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

No	Transaction	General Journal	Debit	Credit
1	a	Cash	52,250
1		Accounts Receivable		52,250

2	b	Cash	235,000
2		Service Revenue		235,000

3	c	Equipment	41,900
3		Cash		12,000
3		Notes Payable (long-term)		29,900

4	d	Advertising Expense	15,600
4		Cash		15,600

5	e	Cash	50,500
5		Accounts Receivable	50,500
5		Service Revenue		101,000

6	f	Utilities Expense	5,900
6		Accounts Payable		5,900

7	g	Salaries and Wages Expense	310,000
7		Cash		310,000

8	h	Supplies	5,100
8		Accounts Payable		5,100

9	i	Accounts Payable	5,100
9		Cash		5,100

3.	Create T-accounts, enter the beginning balances shown above, post the journal entries to the T-accounts, and show the unadjusted ending balances in the T-accounts.

4.	Prepare an unadjusted trial balance as of January 31, 2015.

VANISHING GAMES CORPORATION
Unadjusted Trial Balance
At January 31, 2015
Account Name	Debit	Credit
Cash
Accounts Receivable
Supplies
Equipment
Buildings
Land
Accounts Payable
Unearned Revenue
Notes Payable (long-term)
Common Stock
Retained Earnings
Service Revenue
Salaries and Wages Expense
Advertising Expense
Utilities Expense
Total	$0	$0

5.	Prepare an Income Statement for the month ended January 31, 2015, using unadjusted balances from part 4.

VANISHING GAMES CORPORATION
Income Statement
For the Month Ended January 31, 2015
Revenues

Service Revenue
Total Revenues
Expenses
Salaries and Wages Expense
Utilities Expense
Advertising Expense

Total Expenses
Net Income

Prepare a Statement of Retained Earnings for the month ended January 31, 2015, using the beginning balance given above and the net income from part 5. Assume VGC has no dividends.

VANISHING GAMES CORPORATION
Statement of Retained Earnings
For the Month Ended January 31, 2015
Retained Earnings, January 1, 2015
Add: Net Income
Less: Dividends
Retained Earnings, January 31, 2015	$0

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ACCTG 211 Final: ACCTG211 Exam 1 2017 Fall

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