201 PRACTICE FINAL

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Question 1: PERPETUAL

On September 1, Pennington Supply had an inventory of 20 backpacks at a cost of $25 each. The company uses
a perpetual inventory system. During September, the following transactions and events occurred.

Sept. 4 Purchased 50 backpacks at $25 each from Sievert, terms 2/10, n/30.

6 Received credit of $100 for the return of 4 backpacks purchased on September 4 that were defective.

9 Sold 25 backpacks for $40 each to Lilly Books, terms 2/10, n/30.

13 Sold 15 backpacks for $40 each to Stoner Office Supply, terms n/30.

14 Paid Sievert in full, less discount.

Instructions

Journalize the September transactions for Pennington Supply.

 Question 2: PERIODIC
Drummer Company reported the following inventory transactions during the quarter. Assume that
Drummer Company uses the periodic inventory system and that the following occurred:

Date Transactions Units Per Unit

1-Feb- Beginning Inventory 30 $105
3-Feb- Purchase 280 $130
5-Feb- Sold 260 $255
10-Feb- Purchase 190 $135
12-Feb- Sold 180 $230
24-Feb- Purchase 90 $145
28-Feb- Sold 110 $298

SHOW ALL WORK

Using FIFO calculate:
Cost of goods sold:
Ending Inventory
Gross Margin in percent
Inventory turnover

Using LIFO calculate:

Cost of goods sold:
Ending Inventory
Gross Margin in percent
Inventory turnover _

Using Average calculate:

Cost of goods sold:
Ending Inventory
Gross Margin in percent
Inventory turnover
Question 3: Complete Financial Statements

The following is the adjusted trial balance with end of year retained earnings for ABC
Company in scrambled order. You may be asked to complete ONE of the following
in
good form:

 Multi-step Income Statement

 Classified Balance Sheet
Normal Balance
Accounts payable 34,678 Interest expense 3,456
Accounts Receivables 6,789 Inventories 13,160
Accrued wages 41,577 Land 24,567
Accumulated depreciation 45,607 Long term debt 101,716
Additional Paid in Capital 18,543 Long term investments 96,290
Buildings 97,349 Marketing expense 65,467
Cash and cash equivalents 43,909 Prepaid expenses 2,504
Common stock 20,000 Rent expense 187,455
Cost of sales 435,555 Retained earnings (end of year) 63,756
Current portion of long term debt 45,899 Sales 967,900
Depreciation expense 89,755 Sales Discounts 9,679
Dividends 2056 Sales returns and allowances 48,395
Equipment 27,990 Unearned Revenues 24,238
Income tax expense 4,567 Utility expense 10,896
Intangible Assets 83,456 Wage expense 75,600
Question 4: Adjustments
Booktree, had the following separate situations occur during 2015. The company’s accountant is
preparing the annual financial statements at December 31, 2015 and has asked you to prepare the
adjusting entries for each situation. Next to each transaction in the column of the respective account
classification, write the 1) name of each account, 2) the dollar amount by which each account
increases or decreases, and 3) either debit or credit to indicate the effect on the account, for each of the
adjustments necessary at the end of December, 2015.

Assets Liabilities Equity Revenues Expenses

On Sept 1, 2015, Booktree paid

the annual lease amount of
$12,000 on its retail space. No
adjusting entries have been
prepared since Oct 1, 2015.
The company took out a loan for
$70,000 on July 1, 2015 at 4% per
year. No interest has been paid or
recorded as of Dec. 31, 2015.
(Show calculations)

Employees earn $6000 a week for

days and are paid on Friday.
Dec 31 falls on Tuesday.

Booktree received and recorded a

$1,500 deposit from a customer
order in Nov. The books were
delivered and invoiced on Dec. 31
for $2,500.

Snow removal services of $500

were used in December. They will
be paid on Jan. 15, 2016.

The company purchased

equipment for $100,000 on Sep 1,
2015 with a useful life of 5 years.
No depreciation has been
recorded for 2015. (Show
calculations)
 Question 5 Bank Reconciliation:
Grier Food Store used the following information in recording its bank reconciliation for the month of April.
Balance per books April 30 $ 905
Balance per bank statement April 30 $11,300

(1) Checks written in April but still outstanding $6,300.

(2) Checks written in March but still outstanding $2,800.
(3) Deposits of April 30 not yet recorded by bank $4,900.
(4) NSF check of customer returned by bank $500.
(5) Check No. 210 for $594 was correctly issued and paid by bank but incorrectly entered in the cash
payments journal as payment on account for $549.
(6) Bank service charge for April was $40.
(7) A payment on account was incorrectly entered in the cash payments journal and posted to the
accounts payable subsidiary ledger for $824 when Check No. 318 was correctly prepared for $284.
The check cleared the bank in April.
(8) The bank collected a note receivable for the company of $6,000 plus $240 interest revenue.

Instructions
Prepare a bank reconciliation at April 30.
Question 6: Deleted

Question 7: Periodic

This information relates to Tandi Co.

1. On April 5 purchased merchandise from Buehler Company for $33,000, terms

2/10, net/30.
2. On April 6 paid freight costs of $900 on merchandise purchased from Buehler
Company.
3. On April 7 purchased equipment on account for $26,000.
4. On April 8 returned some of the April 5 merchandise to Buehler Company which cost
$3,000.
5. On April 15 paid the amount due to Buehler Company in full.

Instructions
(a) Prepare the journal entries to record these transactions on the books of Tandi Co. using a
periodic inventory system.
(b) Assume that Tandi Co. paid the balance due to Buehler Company on May 4 instead of April 15.
Prepare the journal entry to record this payment.
8. The balance in the office supplies account on June 1 was
$5,200, supplies purchased during June were $2,500, and the supplies on hand
at June 30 were $2,000. The amount to be
used for the appropriate adjusting entry is

9. On January 1, 2011, P.T. Scope Company purchased a computer system for

$3,240. The company expects to use the system for
3 years. The asset has no salvage value. The book value of the system at
December 31, 2012 is

10.Joyce's Gifts signs a three-month note payable to help finance increases in

inventory for the Christmas shopping season. The note is signed on November 1
in the amount of $50,000 with annual interest of 12%. What is the adjusting entry
to be made on December 31 for the interest expense accrued to that date, if no
entries have been made previously for the interest?

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11. A business pays weekly salaries of $25,000 on Friday for a five- day week
ending on that day. The adjusting entry necessary at the end
of the fiscal period ending on a Thursday is

12. Farr Company paid the weekly payroll on January 2 by debiting Wages
Expense for $45,000. The accountant preparing the payroll entry overlooked
the fact that Wages Expense of $27,000 had been accrued at year end on
December 31. The correcting entry is

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13. A lawyer collected $830 of legal fees in advance. He erroneously debited Cash
for $380 and credited Accounts Receivable for $380. What is the correcting
entry?
$380. The correcting entry is

14. The cash account shows a balance of $45,000 before reconciliation. The bank
statement does not include a deposit of $2,300 made on the last day of the
month. The bank statement shows a collection by the bank of $940 and a
customer's check for $320 was returned because it was NSF. A customer's
check for $450 was recorded on the books as $540, and a check written for $79
was recorded as $97. The correct balance in the cash account was

15. Rodgers Company lends Lanier Company $40,000 on April 1, accepting a four-
month, 9% interest note. Rodgers Company prepares financial statements on
April 30. What adjusting entry should be made before the financial statements
can be prepared?

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16. The Aces, a semi-professional baseball team, prepare financial statements on a
monthly basis. Their season begins in April, but in March the team engaged in the
following transactions:
(a) Paid $90,000 to Kansas City as advance rent for use of Kansas City
Stadium for the six month period April 1 through September 30.
(b) Collected $200,000 cash from sales of season tickets for the team's 20 home
games. This amount was credited to Unearned Ticket Revenue.

During the month of April, the Aces played four home games and five road
games.

Instructions
Prepare the adjusting entries required at April 30 for the transactions
above.

17. Trench and Fog Garment Company purchased equipment on June 1 for $81,000,
paying $18,000 cash and signing a 12%, 2- month note for the remaining
balance. The equipment is expected to depreciate $18,000 each year. Trench and
Fog Garment Company prepares monthly financial statements.

Instructions
(a) Prepare the general journal entry to record the acquisition of the
equipment on June 1st.
(b) Prepare any adjusting journal entries that should be made on June 30th.
(c) Show how the equipment will be reflected on Trench and
Fog Garment Company's balance sheet on June 30th.

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18. Prepare the required end-of-period adjusting entries for each independent case
listed below.

Case 1
Moonbeam Company began the year with a $3,000 balance in the Office
Supplies account. During the year, $8,500 worth of additional office supplies
were purchased. A physical count of office supplies on hand at the end of the
year revealed that
$6,400 worth of office supplies had been used during the year. No adjusting
entry has been made until year end.

Case 2
Western Company has a calendar year-end accounting period. On July 1, the
company purchased office equipment for
$30,000. It is estimated that the office equipment will
depreciate $500 each month. No adjusting entry has been made until year end.

Case 3
Ranch Realty is in the business of renting several apartment buildings and
prepares monthly financial statements. It has been determined that 3 tenants in
$700 per month apartments
and one tenant in the $1,000 per month apartment had not paid
their August rent as of August 31st.

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19. On Friday of each week, Earle Company pays its factory personnel weekly
wages amounting to $50,000 for a five-day work week.

Instructions
(a) Prepare the necessary adjusting entry at year end, assuming
December 31 falls on Wednesday.
(b) Prepare the journal entry for payment of the week's wages on the payday
which is Friday, January 2 of the next year.

20. At Westglow Company, the following errors were discovered after the
transactions had been journalized and posted.
Prepare the necessary correcting entry for each of the following.

a. A collection on account of $500 was debited to Cash $500 and credited to

Service Revenue $500.
b. The purchase of supplies on account for $1,250 was recorded as a debit to Supplies
for $1,550 and a credit to Accounts Payable for
$1,550.

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21. At March 31, account balances after adjustments for Blowing
Rock Stage Theatre are as follows:
Account Balances
Accounts (After Adjustment)
Cash $ 6,000
Concession Supplies 4,000
Theatre Equipment 40,000
Accumulated Depreciation—Theatre 12,000
Equipment
Accounts Payable 5,000
Common Stock 4,000
Retained Earnings 16,000
Dividends 12,000
Ticket Revenues 60,000
Concession Revenues 51,000
Advertising Expense 12,000
Concession Supplies Expense 19,000
Depreciation Expense 4,000
Miscellaneous Expense 16,000
Rent Expense 12,000
Salaries Expense 18,000
Utilities Expense 5,000

Instructions
Prepare the closing journal entries for Blowing Rock Stage
Theatre.

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22. These financial statement items are for Lexulous Company at year-end, July
31, 2011.

Salaries payable $ 4,580 Note payable (long- $ 3,300

term)
Salaries expense 45,700 Cash 22,200
Utilities expense 19,100 Accounts Receivable 9,780
Equipment 22,000 Accumulated 6,000
depreciation
Accounts payable 4,100 Dividends 4,000
Commission 56,100 Depreciation expense 4,000
revenue
Rent revenue 6,500 Retained earnings 30,000
(1/1/2011)
Common stock 16,200

Instructions
(a) Prepare an income statement and a retained earnings statement for
the year.
(b) Prepare a classified balance sheet at July 31, 2011.

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23. (a) Kelso Company purchased merchandise on account from Office Suppliers
for $129,000, with terms of 2/10, n/30. During the discount period,
Kelso returned some merchandise and paid $117,600 as payment in full.
Kelso uses a perpetual inventory system. Prepare the journal entries that
Kelso Company made to record:
(1) the purchase of merchandise. (2) the
return of merchandise.
(3) the payment on account.

(b) Noble Company sold merchandise to Fugate Company on account for

$73,000 with credit terms of ?/10, n/30. The cost of the merchandise
sold was $43,800. During the discount period, Fugate Company
returned $3,000 of merchandise and paid its account in full (minus the
discount) by remitting $68,600 in cash. Both companies use a perpetual
inventory system. Prepare the journal entries that Noble Company made to
record:
(1) the sale of merchandise. (2) the
return of merchandise. (3) the
collection on account.

24. Bryant Company sold goods on account to Kolmer Enterprises with terms of
2/10, n/30. The goods had a cost of $600 and a selling price of $800. Both
Bryant and Kolmer use a perpetual inventory system. Record the sale on the
books of Bryant and the purchase on the books of Kolmer.

25. Assume that Vangundy Company uses a periodic inventory system and has these
account balances: Purchases $600,000;
Purchase Returns and Allowances $25,000; Purchase Discounts
$11,000; and Freight-in $19,000; beginning inventory of
$45,000; ending inventory of $55,000; and net sales of
$750,000. Determine the cost of goods sold.

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26. On September 1, Reid Supply had an inventory of 15 backpacks at a cost of $20
each. The company uses a perpetual inventory system. During September, the
following transactions and events occurred.

Sept. 4 Purchased 70 backpacks at $20 each from Hunter, terms 2/10,

n/30.
6 Received credit of $120 for the return of 6 backpacks purchased on
Sept. 4 that were defective.
9 Sold 40 backpacks for $30 each to Oliver Books, terms
2/10, n/30.
13 Sold 15 backpacks for $30 each to Heller Office
Supply, terms n/30.
14 Paid Hunter in full, less discount.

Instructions
Journalize the September transactions for Reid Supply.

27. The adjusted trial balance of Kasten Company contained the following
information:
Debit Credit
Sales $660,000
Sales Returns and Allowances $
20,000
Sales Discounts 7,000
Cost of Goods Sold 436,000
Freight-out 2,000
Advertising Expense 15,000
Interest Expense 18,000
Store Salaries Expense 55,000
Utilities Expense 28,000
Depreciation Expense 7,000
Interest Revenue 30,000

Instructions
1. Use the above information to prepare a multiple-step income
statement for the year ended December 31, 2011.

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28. Paxson Supply Company uses a periodic inventory system.
During September, the following transactions and events occurred.

Sept. 3 Purchased 80 backpacks at $30 each from Barnes

Company, terms 2/10, n/30.
Sept. 6 Received credit of $150 for the return of 5 backpacks purchased on
Sept. 3 that were defective.
Sept. 9 Sold 15 backpacks for $40 each to Starr Books, terms
2/10, n/30.
Sept. 13 Paid Barnes Company in full.

Instructions
Journalize the September transactions for Paxson Supply
Company.

29. The following information is available for Hopkins Company:

Beginning inventory $ 45,000
Ending inventory 70,000
Freight-in 10,000
Purchases 270,000
Purchase returns and 8,000
allowances

Instructions
Compute each of the following: (a)
Net purchases
(b) Cost of goods purchased
(c) Cost of goods sold

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Use the following to answer questions 30-32:

Hoyt Company's inventory records show the following data for the month of
September:
Units Unit Cost
Inventory, September 1 100 $3.00
Purchases:September 8 450 3.50
September 18 300 3.70

30. A physical inventory on September 30 shows 250 units on hand.

Calculate the value of ending inventory and cost of goods sold if the company
uses FIFO inventory costing and a periodic inventory system.

31. A physical inventory on September 30 shows 250 units on hand.

Calculate the value of ending inventory and cost of goods sold if the company
uses LIFO inventory costing and a periodic inventory system.

32. A physical inventory on September 30 shows 250 units on hand.

Calculate the value of the ending inventory and cost of goods sold if the
company uses weighted average inventory costing and a periodic inventory
system. Round cost per unit to 2
decimal places and ending inventory and cost of goods sold to
the nearest dollar.

33. Compute the lower-of-cost-or-market valuation by category for

Aber Company's total inventory based on the following:
Inventory Cost Data Market Data
Categories
A $18,000 $17,200
B 14,000 14,600
C 21,000 20,500

34. At August 31, Litke Company has this bank information: cash balance per bank
$7,450; outstanding checks $962; deposits in transit $1,700; and a bank service
charge $20. Determine the
adjusted cash balance per bank at August 31, 2011.

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35. The cash balance per books for Feagen Company on September 30,
2011 is $10,740.93. The following checks and receipts were recorded for
the month of October, 2011:

Checks Receipts
No. Amount No. Amount Amount Date
17 $372.96 22 $ 578.84 $843.85 10/ 5
18 $780.62 23 $1,687.50 $941.55 10/21
19 $157.00 24 $ 921.30 $808.58 10/27
20 $587.50 25 $ 246.03 $967.00 10/30
21 $234.15

In addition, the bank statement for the month of October is presented

below:

Check No. 18 was correctly written for $708.62 for a payment on account. The NSF
check was from S. Long, a customer, in settlement of an accounts receivable. An
entry had not been made for the NSF check. The credit memo is for the collection of
a note
receivable including interest of $60 which has not been accrued. The bank service
charge is $35.00.

Instructions
(a) Prepare a bank reconciliation at October 31.
(b) Prepare the adjusting journal entries required by the bank reconciliation.

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 36. Determine the interest on the following notes:

(a) $2,000 at 6% for 90 days. (b) $900

at 9% for 5 months. (c) $3,000 at 8%
for 60 days (d) $1,600 at 7% for 6
months

37. At the beginning of the year, Gant Company had total assets of $585,000 and total
liabilities of $300,000.

Answer the following questions viewing each situation as being independent of the
others.

(a) If total assets increased $48,500 during the year, and total liabilities decreased
$85,000, what is the amount of stockholders' equity at the end of the year?

(b) During the year, total liabilities decreased $76,000 and stockholders' equity
decreased $15,000. What is the amount of total assets at the end of the year?

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