Midterm Exam.xlsx

1.) Determine if the following adjusting entries are AE PE AR UR Answers: UR UR AE AE PE UR

= = = =

Accrued expenses Prepaid expenses Accrued revenue Unearned revenue

a.) Atlas Magazine was previously prepaid $400,000 by subscribers and has b.) Hornsby Company agreed to provide 1,000 units of its product to Micha c.) Nancy and Sons owes its employees $30,000 for work done over the pa d.) Replay Inc. advertised on TV 44 during the month of April, but has not y e.) Centurion Company paid Reliable Insurance Company $54,000 for insur f.) Reliable Insurance Company received a payment of $54,000 for insuranc

2.) Determine if the following transactions for Marlin Corporation require an adjustmen

a.) At the bexginning $90,000 in advanc Adjustment is require

b.) Marlin pays its em Adjustment required

c.) Marlin paid $300, but only one mont Adjustment required

d.) At the beginning o yet paid any cash t No adjustment neede

3.) Keating Inc. rents its headquarters from Starling Enterprises for $10,000 per month.

a.) Record the entry t Prepaid rent incre cash decreases

b.) Record the entry t Cash Increases Unearned revenue

c.) Record the adjusti Pre Paid Rent Dec Rent Expanses Increa

d.) Record the adjusti Unearned Revenue Rent Revenue increas

4.) Leon Jackson is ecstatic! First National Bank just approved a loan for Leon to start a designing sites. During June, his first month of business, the following occur: a.) Webworks signs a note at the bank and is given $10,000 cash.

b.) Leon deposits $2,000 of his own money into Webworks' checking accou

c.) Webworks purchases a new computer and additional equipment for $3,

d.) Webworks purchases supplies worth $200 on account that should last W

e.) Webworks hires Nancy Po to assist with administrative tasks. She will c her assistance.

f.) Webworks begins working on his first two websites, one Juan Sanchez, a Pauline Smith, a local businesswoman.

g.) Webworks completes the site for Mr. Sanchez and sends him a bill for $

h.) Webworks completes the site for Ms. Smith and sends her a bill for $45

i.) Webworks collects $600 in cash from Mr. Sanchez.

j.) Webworks pays Nancy $100 for her work on Mr. Sanchez' Web site.

k.) Webworks receives $500 in advance to work on a Website for a local res

l.) Webworks pay taxes of $200 in cash.

m.) Webworks owes Nancy $100 for her work on Ms. Smith's Web site.

n.) Leon's parents let him know that Webworks owes $80 toward

o.) Webworks only used half of the supplies purchased in (d) above.

i.) Prepare journal entries for the above events, if ii.) Prepare an unadjusted trial balance for Webw iii.) Prepare adjusting entries for the following (it iv.) Prepare an adjusted trial balance for Webwor

5.) Jan Haley owns and operates Haley's Dry Cleaners. The following occurred during D

a.) On Dec. 1, Haley prepaid rent on her store for December and January w

b.) On December 1, Haley purchased insurance with cash in the amount of

c.) Haley paid $900 of her accounts payable balance.

d.) Haley paid off all of her salaries payable balance.

e.) Haley purchased supplies on account in the amount of $2,400.

f.) Haley paid a salary to her assistant of $1,000 in cash for work done in th

g.) Haley dry-cleaned clothes for customers on account in the amount of $8

h.) Haley collected $6,300 of her accounts receivable balance.

i.) Haley paid tax of $750 in cash.

i.) Prepare the journal entry for each transaction ii.) Prepare a trial balance dated 12/31/XX iii.) Make the following adjusting entries for the m Rent Expe 1000 and post them to the Prepaid Rent 1000 Insurance 2000 Prepaid Insurance

2000

salary exp 1000 salary payable

1000

supplies e supplies

2000

2000

iv.) Prepare a balance sheet, income statement, s

6.) On January 1, Kevin Reynolds, a student at State U, decides to start a business. Kevi need for mass produced copies of programs on CD's. While a lot of students have a of CD's is needed.

Kevin believes with a beginning investment in specialty equipment, he can provide a Kopies." Of course, Kevin is very careful to ensure his customers have full ownership

The following occurs during January: a.) Kevin deposits $500 of his own money into the company’s checking acc cash 500 capital stock 500

b.) Kevin signs a note payable in the amount of $1,000 from Neighborhood cash 1000 note payable 1000 c.) KKCDK (Kevin’s Kool CD Kopies) purchases a CD duplicator (a piece of eq equipment 1300 cash 1300 d.) KKCDK purchases 500 blank CDs for $150 on account. supplies 150 account payable 150 e.) KKCDK pays $20 cash for flyers to advertise. prepaid advertising 20 cash 20 f.) KKCDK quickly catches on with the student groups on campus. KKCDK se of the CD's and the student groups owe for another 100 CD's. 240 240

account receivable 80 sales revenue 80 g.) KKCDK pays $100 on its accounts payable. accounts payable 100 cash 100 h.) KKCDK receives $40 in advance to copy 50 CDs for a student group. He w unearned revenue 40 cash 40 i.) KKCDK incurs $40 in tax expense. The taxes will be paid in February. tax expense 40 accounts payable 40 j.) Kevin’s roommate, Mark, helps with the CD copying and delivering. KKCD salary expense 50 salary payable 50 k.) KKCDK incurs $10 in interest expense. The interest will be paid with the

cash 10 note payable 10 i.) Prepare journal entries for the above events if needed. ("a." th ii.) Prepare an unadjusted trial balance for KKCDK for January. iii.) Prepare adjusting entries for the following. ("j" and "k")

The following occurs during February: l.) Kevin decides to expand outside the college. On the first day of the mon during February and March. prepaid avertisement 20 cash 20 m.) The student groups paid for the 100 CD's not paid in January. cash 80 accoiunt receivable 80 n.) KKCDK paid off its remaining accounts payable, salaries payable, taxes p

o.) KKCDK purchases 450 CD's for $135 on account. supplies 135 accounts payable 135 p.) KKCD sells 500 CD's during the month for $0.80 each. KKCDK receives c cash 360 accounts rec 360

accounts rec 40 sales rev 40 q.) KKCDK comples and delivers the advanced order of 50 CD's described in account rec 40 sales rev 40 s.) KKCDK incurs $80 in tax expense. The taxes will be paid in March. tax expense 80 accounts payable 80

t.) Mark continues to earn his salary of $50 and will be paid on March 1. salart expense 50 salary payable 50 u.) The advertisement in "l." has now been used so an adjustment needs to advertisment expense 40 accounts payable 40 v.) KKCDK incurs $10 in interest expense. The interest will be paid with the notes payable 20 cash 20 i.) Prepare journal entries for the above events if needed. ("l." thr ii.) Prepare an unadjusted trial balance for KKCDK for February. iii.) Prepare adjusting entries for the following. ("t" and "v")

by subscribers and has delivered half of the magazines ordered. f its product to Michaels Inc. and has substantially completed the agreement. ork done over the past two weeks. of April, but has not yet made an entry to record the event. any $54,000 for insurance for twelve months, six of which have passed. f $54,000 for insurance for twelve months from Centurion Company and six months have passed require an adjustment or not. If an adjusting entry is required, give the correct entry.

a.) At the bexginning of the month, Marline agreed to perform services for the next three mont $90,000 in advance. One month has now passed. Adjustment is required. It is needed to reduce Unearned Revenue and in crease revenue by 1/3

b.) Marlin pays its employees every two weeks. At the end of the month, Marlin owes its emplo Adjustment required. Marlin should increase Salaries expense and increased Salaries payable.

c.) Marlin paid $300,000 for rent at the beginning of the month by debiting prepaid rent and cr but only one month has passed. Adjustment required. Marlin must decrease prepaid rent and increase rent expense by one mo

d.) At the beginning of the month, Marlin agreed to perform services for Ryland Company for $ yet paid any cash to Marlin and the work is not substantially complete. No adjustment needed.

r $10,000 per month. On September 1, 20XX, Keating pays Starling $60,000 for six months wort

a.) Record the entry that Keating Inc would make on September 1 when they pay Starling. Prepaid rent incre 60,000 cash decreases 60,000

b.) Record the entry that Starling Enterprises would make on September 1 when they receive th Cash Increases 60,000 Unearned revenue 60,000

c.) Record the adjusting entry that Keating would make on December 31, 20XX, as the company Pre Paid Rent Dec 20,000 Rent Expanses Increase 40,000

d.) Record the adjusting entry that Starling would make on December 31, 20XX, as the compan Unearned Revenue 20,000 Rent Revenue increases 40,000

an for Leon to start a Web site design and maintenance business called Webworks. He is now re wing occur:

0,000 cash.

works' checking account

nal equipment for $3,000

ount that should last Webworks 2 months

ative tasks. She will charge $100 per Website for

s, one Juan Sanchez, a friend of his dad's and the other for sends him a bill for $600

ends her a bill for $450

nchez' Web site.

Website for a local resturant. Work on the site will not begin until July.

Smith's Web site.

orks owes $80 toward the electricity bill. Webworks will pay them in July.

d in (d) above.

or the above events, if needed (items "a" through "l") rial balance for Webworks for June. s for the following (items "m" through "o") l balance for Webworks for June.

ng occurred during December:

ember and January with $2,000 cash

cash in the amount of $2,400 that will last six months

nt of $2,400.

h for work done in the first two weeks of December.

nt in the amount of $8,000.

balance.

for each transaction ("a." through "i.") ated 12/31/XX sting entries for the month of December and post them to the trial balance

, income statement, statement of retained earnings and statement of cashflow for December 31

start a business. Kevin has noticed that various student organizations around campus are havin ot of students have a CD drive on their computers that can write to CD's, it is a slow process whe

ment, he can provide a valuable product to the college community. So on 1/1, Kevin officially beg rs have full ownership rights to the material on their CD's.

mpany’s checking account.

0 from Neighborhood Bank. The note is due in one year.

plicator (a piece of equipment), which can copy 7 CD's at one time. The cost is $1,300 and he pa

on campus. KKCDK sells 400 CDs to various groups for $0.80 per CD. KKCDK receives cash paym r 100 CD's.

a student group. He will not begin work on the project until February.

paid in February.

g and delivering. KKCDK pays Mark a salary of $50 per month. Mark will get his first check on Fe

t will be paid with the note.

nts if needed. ("a." through "i.") KCDK for January. ng. ("j" and "k")

he first day of the month, KKCDK pays $20 in advance for advertising in the local paper. The adve

d in January.

aries payable, taxes payable and interest payable.

ch. KKCDK receives cash for 450 of them and is owed for the remaining 50.

f 50 CD's described in "h."

paid in March.

e paid on March 1.

n adjustment needs to be made.

t will be paid with the note.

nts if needed. ("l." through "s.") KCDK for February. ng. ("t" and "v")

ix months have passed.

orrect entry.

or the next three months for Catsui Corp. for $30,000 per month. Catsui paid Marlin

crease revenue by 1/3 of the amount originally received

Marlin owes its employees $480,000, but will not pay them until the following week. sed Salaries payable.

ng prepaid rent and crediting cash. The $300,000 covered six months of occupancy,

nt expense by one month's worth of he amount paid, or 50,000 (300000/6 months= 50,000 per

Ryland Company for $16,000 per month for the next six months. Ryland has not

00 for six months worth of rent.

hey pay Starling.

1 when they receive the rent payment from Keating.

20XX, as the company prepares its annual financial statements.

20XX, as the company prepares its annual financial statements.

ebworks. He is now ready to purchase his needed equipment, hire his administrative help, and b

Cash A. 10,000 C. 3,000 B. 2,000 J. 100 I. 600 L. 200 K. 500 $9,800

Accounts Payable D. 200 $200.00 Unearned Revenue K. 500

Accounts Receivable G. 600 I. 600 H. 450

$500.00 Note Payable A. 10,000

$450

$10,000

Supplies D. 200

Capital Stock B. 2,000

$200

$2,000

Equipment C. 3,000 $3,000 Webworks Unadjusted Trail Balance 30-Jun Account Title Debits Cash $9,800 Accounts Receivable 450 Supplies 200 Equipment 3,000 Accounts Payable Unearned Revenue Note Payable Capital Stock Retained Earnings, 6/1 Revenue Salaries Expense 100 Tax Expense 200

Accoutnt Title Cash Accounts Receivable Supplies Credits Equipment Accounts Payable SalariesPayable Unearned Revenue Note Payable $200 Capital Stock 500 Retained Earnings, 6/1 10,000 Revenue 2,000 Cost of Goods Sold 0 Salaries Expense 1,050 Tax Expense Utilities Expense Supplies Expense

Totals

$13,750

$13,750 Total

Cash A. 10,000 C. 3,000 B. 2,000 J. 100 I. 600 L. 200 K. 500

Accounts Payable D. 200 N. 80

$9,800

Salaries Payable M. 100

$280.00

Accounts Receivable G. 600 I. 600 H. 450

$100.00

$450

Unearned Revenue K. 500

Supplies

$500

D. 200

O. 100 Note Payable A. 10,000

$100 Equipment C. 3,000

$10,000

$3,000

Cash 5,000 H. 6,300

A. 2,000 B. 2,400 C. 900 D. 1,000

Accounts Receivable 6,500 H. 6,300 G. 8,000 $8,200

Prepaid Rent 0 A. 2,000 $2,000

F. 1,000 I. 750 $3,250 Accounts Payable C. 900 1,200 E.2,400

Salaries Payable D. 1,000 1,000

Note Payable

0

$4,000

Revenue

Supplies Expenses 0

$2,700 Retained Earnings 2,300

0 G. 8,000

$2,300

0 $8,000

Rent Expense 0 0

Tax Expense Insurance Expense 0

0 I. 750

0

$750

hflow for December 31, 20XX

und campus are having more and more t is a slow process when a high volume

1/1, Kevin officially begins "Kevin's Kool CD 500

Cash 1000 240 40

1300 100

20 10

ost is $1,300 and he pays cash.

DK receives cash payment for 300

et his first check on Feb. 1st.

Accounts Payable 100 150 40 $90 Unearned Revenue 40 $40

Cash 500 1000 240 40 20 80

1300 100 10 20

e local paper. The advertisements will run

$360 40 Accounts Payable 100 150 40 90-90=0 135 80 Unearned Revenue 40 $40

d Marlin

ing week.

cupancy,

months= 50,000 per month)

nistrative help, and begin

Retained Earnings 0 0 Sales Revenue G. 600 H. 450

$1,050 Salaries Expense J. 100 $100 Tax Expense L. 200 $200

Webworks Adjusted Trial Balance 30-Jun Debits $9,800 s Receivable 450 100 3,000 s Payable Payable ed Revenue

d Earnings, 6/1

Goods Sold Expense

Expense s Expense

200 200 80 100

Credits

$280 100 500 10,000 2,000 0 1,050

$13,930 Capital Stock B. 2,000

$13,930 Utilities Expense N. 80

$2,000

$80

Retained Earnings 0

Supplies Expense O. 100

0

$100

Sales Revenue G. 600 H. 450 $1,050 Salaries Expense J. 100 M. 100 $200 Tax Expense L. 200 $200 Prepaid Rent

A. 2,000 $2,000

Prepaid Insurance 0 B. 2,400 $2,400

Supplies 0 E. 2,400 $2,400

Note Payable 4,000 $4,000

Capital Stock 3,000 $3,000

Supplies Expenses

Salaries Expense 0 F. 1,000

0 $1,000 Tax Expense

$750

Accounts Receivable 80 $80

Equipment 1300 $1,300

Salaries Payable

Note Payable 1,000 10 $1,010

50 50

Revenue 240 80

Tax Expense

Capital Stock

$500

Salaries Expense 50

40

320

50 40

Accounts Receivable 80 80 40 40

advert 20

Equipment 1300

$1,300

Salaries Payable

Note Payable 1,000 1000 $0

50 50 50

Revenue 240 80 360 $40

$500

Salaries Expense 50 50

Tax Expense 40 40 80

Capital Stock

Haley's Dry Cleaners Unadjusted Trial Balance 31-Dec Account Title

Debits

Cash 5,000 H. 6,300 Credits

Cash $3,250 Accounts Receivable 8,200 Prepaid Rent 2,000 Prepaid Insurance 2,400 Supplies 2,400 Accounts Payable Note Payable Capital Stock Retained Earnings, 12/1 Revenue Salaries Expense 1,000 Tax Expense 750 ###

$3,250 $2,700 4,000 3,000 2,300 8,000

Accounts Payable C. 900

$2,700 Retained Earnings

$20,000 $2,300 Rent Expense 0 J. 1,000 $1,000

Equipment

150

Supplies

Kevin's Kool CD Kopies Unadjusted Trial Balanc 31-Jan

150 $1,300

Account Title

Cash Accounts Receivable Equipment advert Supplies Accounts Payable Note Payable Salaries Payable Capital Stock Unearned Revenue Revenue

Capital Stock 500 $500

Salaries Expense Salaries Expense Tax Expense 50

Equipment

Kevin's Kool CD Kopies Adjusted Trial Balance 31-Jan

Supplies 150 135

$1,300

Account Title Cash Accounts Receivable Equipment

Capital Stock 500 $500

Salaries Expense

note expense 10 10 10

advertising Expense Supplies Accounts Payable Note Payable Salaries Payable Capital Stock Unearned Revenue Revenue Salaries Expense Tax Expense

Cash A. 2,000 B. 2,400 C. 900 D. 1,000

Accounts Receivable 6,500 H. 6,300 G. 8,000

Prepaid Rent J. 1,000 A. 2,000

$8,200

$1,000

Prepaid Insurance B. 2,400 $2,000

F. 1,000 I. 750 $3,250

counts Payable 1,200 E.2,400

Salaries Payable D. 1,000 1,000 L. 1,000 $1,000

Note Payable 4,000 $4,000

Capital Stock

$3,000

$2,700

ained Earnings 2,300

Revenue 0 G. 8,000

$2,300

Supplies Expenses 0 M. 2,000 $2,000

$8,000

ent Expense

$1,000

Tax Expense Insurance Expense 0 K. 400 $400

evin's Kool CD Kopies adjusted Trial Balance 31-Jan Debits

Credits

0 I. 750 $750

Salaries Expense 0 F. 1,000 L. 1,000 $2,000

$360 80 1,300 20 150 $90 1,010 50 500 40 320 50 $40

2000

20000

evin's Kool CD Kopies djusted Trial Balance 31-Jan Debits $850 0 1,300

Credits

20 285 $215 20 50 500 0 720 100 $80 2635 2150

2150

paid Insurance K. 400 $2,000

Supplies M. 2,000 E. 2,400 $400

Account Title

Haley's Dry Cleaners Adjusted Trial Balance 31-Dec Debits

apital Stock 3,000 $3,000

aries Expense

$2,000

Cash Accounts Receivable Prepaid Rent Prepaid Insurance Supplies Accounts Payable Salaries Payable Note Payable Capital Stock Retained Earnings, 12/1 Revenue Supplies Expense Salaries Expense Rent Expense Insurance Expense Tax Expense

$3,250 8,200 1,000 2,000 400

2,000 $2,000 1,000 400 750 $21,000

Haley's Dry Cleaners Income Statement As of December 31, Year Two Credits

Recvenue

$8,000

$2,700 1,000 4,000 3,000 2,300 8,000

$21,000

Expenses: Supplies Salaries Rent Insurance Income before taxes Taxes Net Income

$2,000 2,000 1,000 400

Haley's Dry Cleaners Statement of Retained Earnings As of December 31, Year Two Retained Earnings, December 1 New Income Retained Earnings, December 31

5,400 2,600 750 $1,850

$2,300 1,850 $4,150

Haley's Dry Cleaners Balance Statement December 31, Year Two Assets:

Current: Cash Accounts Receivable Prepaid Rent Prepaid Insurance Supplies Total Current Assets

$3,250 8,200 1,000 2,000 400 $14,850

Liabilities: Current: Accounts Payable Salaries Payable Toal Current Liabilities Noncurrent: Notes Payable Total Liabilities Stockholders' Equity: Capital Stock Retained Earnings Total Stockholders' Equity

$2,700 1,000 $3,700

$

4,000 $7,700 $3,000 4,150 7,150

Total Assets

$14,850

Total Liabilities and Stockholders' Equity

$14,850