Ans: A) Journal Entry On Date of Issue Date Account DR CR

Question # 1 (True or False) (10 Points)
1) True
2) True
3) True
4) False
5) False
6) True
7) False
8) False
9) True
10) True
Question # 2
On September 1, 2019, Anderson lends cash to Lynn Company in exchange for a three-year $20,000
note, in which Lynn promises to pay $1,600 on 8/31/2020, $1,600 on 8/31/2021, and $21,600 on
8/31/2022. The market interest rate on the original issue date of the note is 7%, compounded
annually.
Ans : A) Journal entry on date of issue
Date Account Dr Cr
09-sept-19 Cash $ 20,000
Notes Payable $ 20,000
To record notes payable, matured on 31-08-2022
B) The date Lynn closes the books
Date Account Dr Cr
31-Dec-
2019 Interest Expense $ 466,67
Interest Payable $ 466,67
To record accrued interest for 4 months
C) One year after the date of issue (assuming Anderson receives a cash payment) –
8/31/2020
Date Account Dr Cr
31-Aug-
2020 Interest Expense $ 933,33
Interest Payable $ 466,67
Cash $ 3000
To record interest and repayment of amount $ 1,600
D) Several years ago, Lynn issued a $600,000 bond at par value. As a result of declining
interest rates, the company has decided to call the bond at a call premium of 5 percent. Prepare the
journal entry for the retirement of the bonds (7 points)
Date Account Dr Cr
Bonds Payable $ 600000
Call Premium $ 30000
Cash $ 630000
To record the retirement of bonds
Question # 3 (Inventory 15 Points)
SCENERIO 1 SCENERIO 2
Dollar amount of Gapiam purchases in 20201 $ 365000 $ 73000
2021 Cost of Goods Sold $ 365000 $ 254100
31/12/2021 LIFO Inventory $ 133,100 $ 25,000
Q # 4 Adjusting Entries (12 points)
A. October 1, 20X1 --Golden Corporation borrowed $100,000 and signed a note providing for 8%
interest. The principal and interest are due in one year (on September 30, 20X2)
October 1, 20X1:
Date Account Dr Cr
01-10-20X1 Cash $ 100,000
To record notes payable, maturity date 30-12-20X2
December 31. 20X1:
Date Account Dr Cr
31-12-20X1 Interest Expense $ 2000
Interest Payable $ 2000
To record accrued interest for 3 months, (100,000*8%*3/12)
B. Golden Corporation keeps a small inventory of supplies used for cleaning and maintenance
activities that cannot be matched to any revenues. On January 1, 20X1, the inventory of supplies on
hand was $2,000. During the year, supplies purchased were debited to the supplies inventory
account in the amount of $6,500. On December 31, 20X1, the inventory count of supplies in the
storeroom was $1,750. Give the adjusting entry required at December 31, 20X1, assuming that no
adjusting entries were made during the year.
Date Account Dr Cr
31-12-20X1 Supplies Expense $ 6750
Supplies Inventory $ 6750
To record adjusting entry for use of supplies inventory
Question 5: Statement of Cash Flows (32 points)
Below is Concepcion Company’s current year (2020) Balance Sheet and Statement of Cash Flows.
Please note the following additional information:
• Concepcion Company sold one piece of equipment during the year. At the time of sale, $26,000 in
accumulated depreciation had been recorded on the equipment.
• On August 1, Concepcion Company issued common stock in exchange for land. On that date, the
market value of the stock issued was $68,000.
Calculate the prior year’s (2019) balance sheet ?
Conception Balance Sheet 2020 2019

ASSETS
Current Assets
Cash 25000 13000
Investment in Trading Securities 67000 61000
Accounts Receivable, net 108000 68000
Merchandise Inventories 210000 232000
Total Current Assets 410000 374000
Land 386000 332000

Buildings and Equipment 296000 327000
Accumulated Depreciation -133000 -109000
Total Assets 959000 924000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable 199000 193000
Other Current Liabilities 170000 305000
Total Current Liabilities 369000 498000
Bonds Payable 100000 60000
Total Liabilities 469000 558000
Common Stock 188000 120000

Retained Earnings 302000 246000
Total Shareholders' Equity 490000 366000
Total Liabilities and Shareholders' Equity 959000 924000

Ans: A) Journal Entry On Date of Issue Date Account DR CR

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Ans: A) Journal Entry On Date of Issue Date Account DR CR

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Question # 1 (True or False) (10 Points)

Ans : A) Journal entry on date of issue

B) The date Lynn closes the books

Question # 3 (Inventory 15 Points)

Q # 4 Adjusting Entries (12 points)

December 31. 20X1:

Question 5: Statement of Cash Flows (32 points)

Calculate the prior year’s (2019) balance sheet ?

Conception Balance Sheet 2020 2019

Land 386000 332000

Common Stock 188000 120000

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