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Accounting Principles I

 

Professor King

 
1. (2) points: An examination of the Prepaid Insurance account shows a debit balance of $3,670 at the end of the accounting period before adjustment. Prepare journal entries to record the insurance expense for the period under each of the following independent assumptions:
 
1. An examination of insurance policies shows that insurance costing $1,200 has expired during the period.
 

General Journal							Page 1
Date		Description			Post.Ref.	Debit	Credit

 
1. An examination of insurance policies shows unexpired insurance of $2,640 at the end of the period.
 

General Journal							Page 1
Date		Description			Post.Ref.	Debit	Credit

 

2. (2) points: Dukes Press pays wages of $12,000 every Friday for a five-day workweek. September 30, the last day of the fiscal year, falls on a Tuesday. In the journal provided, prepare the September 30 adjusting entry as well as the October 3 follow-up entry when the wages are paid. Omit explanations.
 

General Journal							Page 1
Date		Description			Post.Ref.	Debit	Credit

 
3. (3) points: On December 12, Roger Kent, a painter, received $1,800 in advance for performing a service that would extend into the following calendar year. By December 31, he still had three-fourths of the service remaining to perform. In the journal provided, prepare the December 12 entry, the December 31 end-of-period adjustment, as well as the entry on January 29 when the job was completed. Omit explanations.
 

General Journal							Page 1
Date		Description			Post.Ref.	Debit	Credit

 
4. (3) points: Using the income statement below, develop a common-size statement by filling in the blanks provided. Show your work. Round to one decimal place.
 

	2013	2013
Net sales	$400,000	_________
Cost of goods sold	232,000	_________
Gross margin	$168,000	_________
Operating expenses	92,000	_________
Income before income taxes	$  76,000	_________
Income taxes expense	30,400	_________
Net income	$  45,600	_________

 
5. (3) points: Prepare a horizontal analysis by computing the amounts and percentage changes for the following balance sheet items; place your answers in the blanks provided.
 

	2013	2012	Amount	Percentage
Assets
Current assets	$  6,500	$  5,000
Property, plant, and equipment	22,000	25,000
Total assets	$28,500	$30,000
Liabilities and Stockholders’ Equity
Liabilities	$  5,500	$10,000
Stockholders’ equity	23,000	20,000
Total liabilities and stockholders’ equity	$28,500	$30,000

 
6. (8) points: Use the following accounts and information to prepare, in good form, an income statement, statement of retained earnings, and balance sheet for Jasper Enterprises for the year ended December 31, 2013. Please prepare in EXCEL or use the templates from the homework assignments.
 

Accounts Payable	$9,600		Land	$78,000
Accounts Receivable	1,200		Notes Payable	12,000
Buildings	104,000		Rent Expense	7,200
Cash	52,400		Retained Earnings,December 31, 2012	168,800
Sales Revenues	38,000		Salaries Expense	16,800
Common Stock	40,000		Inventory	800
Dividends	6,000
Utilities Expense	2,000

 
7. (7) points: Selected amounts from the condensed financial statements of Timson Corporation for 2012 and 2013 are presented below with several amounts missing. The 2011 year-end balance of retained earnings is $82,883.
 

Income Statement	2013	2012
Revenues	$490,304	$       (a)
Costs and expenses	(h)	(501,295)
Income taxes	(853)	(3,603)
Net income	$__   (i)	$ _ _(b)
Statement of Retained Earnings
Beginning-of-year balance	$       (j)	$      (c)
Net income	3,747	(d)
Dividends	(k)	(3,845)
End-of-year balance	$       (l)	$_ _ (e)
Balance Sheet
Total assets	$     (m)	$246,481
Total liabilities	$110,192	$102,239
Common stock	57,968	56,800
Retained earnings	(n)	$      (f)
Total liabilities and stockholders’ equity	$255,473	$     (g)

 

1. Determine the missing amounts indicated by the letters. (Hint: You should not try to find them in alphabetical order.)

 
1.____________
2._____________
3._____________
4.____________
5._____________
6._____________
7._____________
8.___________
9.____________
10.___________
11._____________
12._____________
13.____________
nbsp;
8. (12) points: In the journal provided, prepare journal entries (in good form) for the following transactions. If no entry is required, write “no entry.” Omit explanations.
 

Apr.	1	Investors opened a dry cleaning service, called Same Day Cleaners, by depositing $60,000 into a business bank account and receiving 60,000 shares of $1 par value stock in exchange.
	3	Paid two years rent in advance, $14,400.
	6	Purchased dry cleaning equipment for $40,000. Paid $8,000 in cash, the remainder to be paid in two weeks.
	9	Hired a part-time worker, to be paid $300 per week, starting tomorrow.
	17	Paid the worker’s weekly wage.
	17	Recorded cash received for services performed during the week, $3,000.
	20	Paid for the remainder of the equipment purchased on April 6.
	21	Received $200 in advance of cleaning and boxing a wedding gown.
	23	Performed $500 of dry cleaning services for Asa’s Tuxedo Shop. It will remit payment in three days.
	24	Paid the weekly wages.
	26	Received payment from Asa’s Tuxedo Shop.
	30	Received a telephone bill for $100, which will be paid in two weeks.

 

 

General Journal					Page 1
Date	Description		Post.Ref.	Debit	Credit

 
9. (6) points: In the journal provided, prepare adjusting entries for the following items. Omit explanations.
 
1. Depreciation on machinery is $1,880 for the accounting period.
2. Interest incurred on a loan but not paid or recorded is $1,270.
3. Office supplies of $1,200 were on hand at the beginning of the period. Purchases of office supplies during the period totaled $400. At the end of the period, $280 in office supplies remained.
4. Commissions revenue amounting to $1,080 were earned but not recorded or collected by year end.
5. Prepaid Rent had a $16,000 normal balance prior to adjustment. By year end, 50 percent had expired.
6. Federal income taxes for the year are estimated to be $6,500.
 

General Journal							Page 1
Date		Description			Post.Ref.	Debit	Credit

 
10. (4) points: Below are the adjusted accounts of Millennium Realtors, Inc., for the month ended May 31, 2013, listed in alphabetical order:
 

Accounts Payable		$   400		Dividends	1,000
Accounts Receivable		3,600		Income Taxes Expense	100
Accumulated Depreciation–				Income Taxes Payable	100
	Office Equipment	4,000		Land	1,500
Cash		1,150		Office Equipment	10,000
Commissions Revenue		7,500		Salaries Expense	2,300
Common Stock		8,000		Utilities Expense	150
Depreciation Expense–
	Office Equipment	200

 
In the journal provided, prepare Millennium’s closing entries (omit explanations).
 

General Journal							Page 1
Date		Description			Post.Ref.	Debit	Credit

10. (5) points: Using the following data, prepare a multistep income statement for Morrison Company for the month ended February 28, 2013.
 

Cost of Goods Sold	$30,000
General and Administrative Expenses	8,000
Net Sales	50,000
Selling Expenses	7,000
Income Taxes	950

 
11. (10) points: From the simplified balance sheet and income statement of the business below, compute the following ratios. Assume that the June 30 amounts for total assets and stockholders’ equity also represent their average amounts for the period. Round percentages to the nearest whole percent.
 
1. Profit margin
2. Return on assets
3. Debt to equity
4. Return on equity
5. Asset turnover
 

Sci-Tech Enterprises, Inc.
Balance Sheet
June 30, 2013
Assets			Liabilities
Current assets		$ 4,000	Current liabilities		$  4,000
Investments		2,000	Long-term liabilities		6,000
Property, plant, and			Total liabilities		$10,000
	equipment	12,000
Intangible assets		2,000	Stockholders’ Equity
			Common stock		$  8,000
			Retained earnings		2,000
			Total stockholders’ equity		$10,000
Total assets		$20,000	Total liabilities and stockholders’equity		$20,000

 

Sci-Tech Enterprises, Inc.
Income Statement
For the Year Ended June 30, 2013
Net sales		$24,000
Cost of goods sold		12,000
Gross margin		$12,000
Operating expenses		8,000
Income before income taxes		$ 4,000
Income taxes		1,600
Net income	$ 2,400

 
 

Product Code – Accounting-AW-Q185

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