1.

A company began its business in October and during that month completed these transactions:

a. Invested $50,000 cash, and $15,000 of land in exchange for common stock.
b. Collected $1,200 from a customer for a work to be done next year.
c. Received $1,000 cash from a customer for services in the current month.
d. Purchased a building that cost $30,000. The firm made a down payment of $20,000 cash and signed a long-
term note payable for the balance
e. Paid $50 cash for office supplies.

Prepare journal entries to record the above transactions. Explanations are unnecessary.

2. A company began its business in October and during that month completed these transactions:

a. Invested $20,000 cash, and $35,000 of building in exchange for common stock.
b. Collected $1,200 from a customer from a completed work.
c. Received $1,000 cash from a customer for services to be completed next month.
d. Paid $10 cash for office supplies.
e. Purchased a land that cost $25,000. The firm made a down payment of $15,000 cash and signed a long-
term note payable for the balance

Prepare journal entries to record the above transactions. Explanations are unnecessary.

3. A corporation had the following assets and liabilities at the beginning and end of recent year:

Assets Liabilities
Beginning of the year $140,000 $50,000
End of the year 200,000 30,000

Determine what investments were made by stockholders if dividends paid during the year were $5,000 and net income
was $1,000

4. A corporation had the following assets and liabilities at the beginning and end of recent year:

Assets Liabilities
Beginning of the year $150,000 $40,000
End of the year 210,000 30,000

Determine what dividends were paid during the year if investments by shareholders were $20,000 and net income was
$90,000

5. The cash purchase of equipment for $4,150 was erroneously (შეცდომით) recorded in the journal as
$4,050 debit to Office equipment and $4,050 credit to Accounts Payable. Prepare the correcting entry for
this mistake.

6. The $6,000 cash payment of a 5-year insurance policy has been recorded as $5,500 Debit to Insurance
expense and $5,500 credit to Accounts Payable. Prepare the correcting entry for this mistake.

7. Tbilisi Shopping Mall collected 4 month rent in advance from Zara Georgia on September 1 of the current
year in amount of $16,000. Prepare the required journal entry on September 1 and adjusting entry on
December 31 of the current year for a) Tbilisi Shopping Mall; b) Zara Georgia
 8. Based on the below information please prepare the adjusting journal entries on December 31, 2016 for
Delta Company:

a) On June 1, 2016, a company paid the $1,350 premium on a three-year insurance policy with benefits
beginning on that date.
b) A company had no office supplies available at the beginning of the year. During the year, the company
purchased $150 worth of office supplies. On December 31, $80 worth of office supplies remained.
c) A company purchased a new vehicle at a cost of $39,500 on June 1, 2016. The vehicle is estimated to have a
useful life of 6 years and a salvage value of $3,500.
d) A company has 3 employees paid $50 per day each. By December 31 the employees worked 4 days for which
they will be paid in January.
e) The company has notes payable in amount of $40,000. By December 31 $500 of interest payable in January
has been accrued.

9. The latest adjusting entries were recorded by company on November 30 th. Prepare all
required adjusting entries on December 31st based on the below information:

a. Monthly salaries in amount of $6,000 are paid on the 5th of each month. (25 days of accrued
salaries have not been paid yet)
b. Company’s Office Supplies account shows November ending balance of $300. During December
$1,000 worth of supplies were purchased. A physical count of the supplies showed $210 of
unused supplies available On December 31st.
c. In November the Company received $9,000 in advance for service to be rendered later. During
December the Company performed half of this job.
d. By the end of December the Company received utility bill for $300, the bill has not been paid
yet.
e. During December the Company earned $1,200 revenue, but has not yet received cash.
f. On November 1st the Company paid $3,000 rent in advance. The rent payment covers three
months starting from November 1st.

10. A company uses perpetual inventory system and had the following transactions during September 2017:

Sept. 1 Purchased merchandize for cash $700

Sept. 2 Sold merchandise on credit for $1000, terms 3/10, n/20. The items sold had a cost of $700.
Sept. 6 Purchased merchandise on credit for $800, terms 2/20, n/30
Sept. 9 A customer who purchased merchandise on Sept. 2 returned $300 worth merchandise. The cost of returned
merchandize is $120
Sept. 10 Received full payment for merchandise sold on Sept. 2
Sept 15 Returned $150 worth merchandize purchased on Sept. 6
Sept. 23 Paid for merchandize purchased on Sept. 6

11. A company uses perpetual inventory system and had the following transactions during September 2017:

Sept. 1 Purchased merchandize on credit $800 terms 2/20, n/30

Sept. 2 Sold merchandise on credit for $2000, terms 3/10, n/20. The items sold had a cost of $900.
Sept. 6 Purchased merchandise with cash for $500
Sept. 9 Returned $150 worth merchandize purchased on Sept. 6 and received cash immediately.
Sept. 10 A customer who purchased merchandise on Sept. 2 returned $500 worth merchandise. The cost of returned
merchandize is $220
Sept 11 Received full payment for merchandise sold on Sept. 2
Sept. 19 Paid for merchandize purchased on Sept. 1
12. A company had cost of goods sold of $91,000. Determine Sales and Gross profit if Net loss
was $2,000 and Other expenses were $51,000.

13. A company had expenses other than cost of goods sold of $51,000. Determine Net income (loss) and Cost
of goods sold if Gross profit was $50,000 and Sales were $120,000.

14. Given the following items and costs as of the balance sheet date, determine the value of ABC
Company’s merchandise inventory.
 $3,000 owned by another company but in the possession of ABC the consignee.
 $2,500 goods sold by ABC to another company. The goods are in transit and shipping terms
are FOB destination point.
 Damaged goods owned by ABC which originally cost $10,000 but which now have an $3,000
net realizable value
 $2,000 goods sold by another company to ABC. The goods are in transit and shipping terms
are FOB shipping point.

15. Given the following items and costs as of the balance sheet date, determine the value of ABC
Company’s merchandise inventory.
 $6,000 owned by another company but in the possession of ABC the consignee.
 $1,500 goods sold by ABC to another company. The goods are in transit and shipping terms
are FOB destination point.
 Damaged goods owned by ABC which originally cost $10,000 but which now have an $5,000
net realizable value
 $1,000 goods sold by another company to ABC. The goods are in transit and shipping terms
are FOB shipping point.

16. A company has the following per unit original costs and replacement costs for its inventory:

Part A: 10 units with a cost of $3, and replacement cost of $2.5

Part B: 20 units with a cost of $9, and replacement cost of $9.5
Part C: 30 units with a cost of $8, and replacement cost of $5

Under the lower of cost or market method, calculate the total value of this company's inventory. Apply LCM:
1) to each individual item and 2) to total cost of inventory.

17. A company has the following per unit original costs and replacement costs for its inventory:

Part A: 10 units with a cost of $4, and replacement cost of $3.5

Part B: 20 units with a cost of $8, and replacement cost of $8.5
Part C: 30 units with a cost of $7, and replacement cost of $6

Under the lower of cost or market method, calculate the total value of this company's inventory. Apply LCM:
1) to each individual item and 2) to total cost of inventory.

18. A company made the following merchandise purchases and sales during the month of May:

May 1 purchased 30 units at $10 each

May 5 purchased 40 units at $12 each
May 10 sold 50 units at $50 each
May 20 purchased 20 units at $20 each
May 25 Sold 30 units at $52 each
May 29 purchased 10 units at $25 each

There was no beginning inventory. What would be the cost of goods sold in May and cost of the ending
inventory if the company uses the FIFO / Weighted Average perpetual method? Prepare journal entries on
May 10 and May 25 for both methods separately (consider all sales for cash).
 19. A company made the following merchandise purchases and sales during the month of May:

May 1 purchased 30 units at $10 each

May 5 purchased 20 units at $12 each
May 10 sold 40 units at $50 each
May 20 purchased 20 units at $20 each
May 25 Sold 10 units at $52 each
May 29 purchased 10 units at $25 each

There was no beginning inventory. What would be the cost of goods sold in May and cost of the ending
inventory if the company uses the LIFO / Weighted Average perpetual method? Prepare journal entries on
May 10 and May 25 for both methods separately (consider all sales for cash).

20. The balances for the accounts of Mike's Maintenance, Inc. for the year ended December 31 are shown
below. Each account shown had a normal balance.

Accounts payable .............. $ 6,500 Wages expense ................. $36,000

Accounts receivable .......... 7,000 Rent expense ..................... 6,000
Cash .................................. 9,500 Retained Earnings ............. 68,700
Maintenance supplies ........ 1,200
Building ............................ 125,000 Land .................................. 50,000
Supplies expense ............... 21,500 Unearned maintenance
Common Stock.................. 50,000 fees ................................. 4,000
Maintenance revenue ........ 175,000 Dividends .......................... 48,000

Prepare a trial balance.

21. The records of ABC Company showed the following account balances on December 31, 2015:

Accumulated depreciation - Furniture 4,000

Depreciation expense 1,000
Common Stock 10,000
Salary payable 3,000
Service Revenue 7,100
Cash 5,000
Accounts receivable 16,000
Accounts payable 2,000
Unearned revenue 3,500
Supplies 600
Inventory 0
Sales revenue 9,000
Rent expense 1,000
Prepaid rent 3,000
Retained Earnings on December 31, 2016 (ending) ?
Cost of Goods Sold 6,500
Salary expense 3,500
Dividends 1,000
Note Payable 9,000
Furniture 10,000

Using the above information, prepare a balance sheet at December 31, 2015
 22. A company has $90,000 in outstanding accounts receivable in the end of reporting period and
it uses the allowance method to account for uncollectible accounts. Experience suggests that
6% of outstanding receivables are uncollectible. The current credit balance (before
adjustments) in the allowance for doubtful accounts is $800.
Prepare the adjusting journal entry to record bad debts expense for the current period.

23. Each December 31, Davis Company ages its accounts receivable to determine the amount of its adjustment
for bad debts. At the end of the current year, management estimated that $16,900 of the accounts receivable
balances would be uncollectible. The Allowance for Doubtful Accounts account had a debit balance of
$3,200 before any year-end adjustment for bad debts.
Prepare the adjusting journal entry that Davis Company should make on December 31, of the current year,
to estimate bad debts expense

24. ABC Co. sold $80,000 of accounts receivable to First Bank and incurred a 2% factoring fee. Prepare the
journal entry for ABC Co. to record the sale.

25. Tecom accepts the NOVA credit card for credit card sales. Tecom sends credit card receipts to NOVA on a
weekly basis. NOVA charges Tecom a 2% fee. Tecom usually receives payment from NOVA within a
week. Prepare entries in general journal form to record the following transactions of Tecom involving the
NOVA credit card.

March 11 Sold merchandise for $4,500 to customers who use the NOVA credit card
and deposited the credit card receipts.
March 20 Received cash proceeds less the service charge for the March 14 deposit to
NOVA.

26. On January 1 a company receives a 10%, 90-day note for $1,500. Calculate the total interest received on
the maturity date. Prepare all required entries on January 1 and on maturity day.

27. Anchor Inc. sold merchandise to UTA company on November 10 of the current year. Anchor accepted
UTA's $5,500, 60-day, 8% note. What entry should Anchor make on November 10, on December 31, and
on January 9 of the next year when the note is received?

28. On June 15, the UTA Company wrote off the $1,500 uncollectible account of its customer, L. Parker. On
July 20, the company received a check for the full amount of $1,500 from Parker.

 Prepare the required journal entries for on June 15 and on July 20 if UTA uses the allowance method
for accounting for uncollectable accounts.
 Prepare the required journal entries for on June 15 and on July 20 if UTA uses the direct write-off
method of accounting for uncollectible accounts/

29. A company has the following unadjusted account balances at December 31, of the current year:
Accounts Receivable of $175,700 and Allowance for Doubtful Accounts of $800 (debit balance).
This company uses the aging of accounts receivable to estimate its bad debts. The following aging
schedule reflects its accounts receivable at the current year-end:

Account Age Balance Estimated Uncollectible

Current (not yet due) .............. $90,000 1.0 %
%
1-30 days past due .................. 5,000 2.5 %
31-60 days past due ................ 10,000 10.0 %
Total $105,000
- Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31, of the
current year, balance sheet.
- Prepare the adjusting journal entry to record bad debts expense for the current year.
30. The calendar year-end adjusted trial balance for Worker Products Co. is as follows:

Worker Products Company

Adjusted Trial Balance
December 31
Debit Credit
Cash $ 9,400
Accounts receivable 25,000
Merchandise inventory 36,000
Office supplies 900
Store equipment 75,000
Accumulated depreciation - store equipment $ 22,000
Office equipment 60,000
Accumulated depreciation -office equipment 15,000
Accounts payable 42,000
Long Term Notes payable 10,000
Common stock 40,000
Retained earnings 70,700
Dividends 48,000
Sales 325,000
Sales discounts 6,000
Sales returns and allowances 16,500
Cost of goods sold 195,000
Sales salaries expense 32,500
Depreciation expense - store equipment 11,000
Depreciation expense - office equipment 7,500
Office supplies expense 1,300
Interest expense 600 ________
Totals $524,700 $524,700

a. Prepare a multi-step Income Statement for the current year

b. Prepare a classified year-end balance sheet