Accounting 110 – Practice Exam W/ Answers

Accounting 110 – Practice Exam W/ Answers

Camosun College Financial Accounting Acct110 PRACTICE Final Exam B. Edwards Name: ____________________________________________________________ ___________________ Question One: A/R and Bad debts (15 minutes) Read each transaction and record the appropriate journal entry for Morrison Consultants, which has a June 30 year end. Explanations are NOT required. 1. On June 30 2011, Morrison prepares an aging schedule of accounts receivable that shows estimated uncollectible accounts of $5,200. Before journal entries, the Allowance for Doubtful accounts has a debit balance of $300 and Accounts Receivable has a balance of $85,000. . On July 5, Morrison was notified that Sperry Ltd has declared bankruptcy and Morrison writes off its A/R of $800. 3.

On September 12, Sperry notifies Morrison that it can pay its $800 debt and includes a cheque for the entire amount. Date Account Debit Credit Calculations: What is the net realizable value of the accounts receivable at June 30, 2011? _______________ What is the net realizable value of the accounts receivable at July 5, 2011? _______________ There is no representation that the practice questions reflect the actual exam questions. |Page Camosun College Financial Accounting Acct110 PRACTICE Final Exam B. Edwards Question Two: Capital Assets and amortization. (30 minutes) Townsend Engineers owns a piece of machinery that it purchased 3 years ago for $40,000. The machinery has an estimated salvage value of $5,000 and an estimated useful life of 10 years. Straight-line amortization is used. At December 31, 2010, the accumulated amortization account had a balance of $10,500. On April 1, 2012 Townsend sold the machinery for $27,000. 1. Record the amortization on December 31, 2011.

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2.Record all of the necessary journal entries to record the sale of machinery on April 1, 2012. Date Account Debit Credit Calculations: There is no representation that the practice questions reflect the actual exam questions. 2|Page Camosun College Financial Accounting Acct110 PRACTICE Final Exam B. Edwards Question Two: continued. Townsend bought new machinery at a cost of $90,000 on April 1, 2011. Installation costs for the machinery was $10,000. The business signed a note for $100,000 to pay for the machinery cost and the installation. The machinery has a 5-year useful life and residual value of $8,000.

The business uses the double declining balance method for this machinery. Record the journal entries for the following transactions. 1. the purchase of the machinery on April 1, 2011 2. Dec 31, 2011 amortization 3. The accrual of the interest on the note at 5% interest at December 31, 2011 4. The payment of the interest and $10,000 loan payment on March 31, 2012 5. Dec 31, 2012 amortization Date Account Debit Credit Calculations: There is no representation that the practice questions reflect the actual exam questions. 3|Page Camosun College Financial Accounting Acct110 PRACTICE Final Exam B. Edwards

Question Three: Adjusting Journal Entries (15 minutes) Write the necessary adjusting journal entries for Cassie Services for the year ended June 30, 2011 in the space provided below and on the next page. Explanations are NOT required. 1. The Supplies asset account shows a balance of $1,500 but a physical count on June 30 shows only $300 of supplies. 2. The 1 year insurance policy premium was paid on May 1 for $3,600 and Prepaid Insurance was debited. 3. On June 1, Cassie Services received $1,200 for 2 months rent from another business which is renting a small building from Cassie for 6 months.

Cassie credited Unearned rent revenue. 4. Cassie performed services for a client for $900 but has not yet billed the client or recorded the transaction. 5. Cassie pays employees $2,000 per 5-day work week ending Friday and June 30 falls on a Wednesday. 6. The business owns a van that cost $18,000 and has an estimated useful life of 6 years and no salvage value. The van was purchased April 1, 2011. The company uses straight-line amortization. Date Account Debit Credit There is no representation that the practice questions reflect the actual exam questions. 4|Page

Camosun College Financial Accounting Acct110 PRACTICE Final Exam B. Edwards Question Four: Financial Statements (15 minutes) From the following list of accounts prepare the ASSET section of the Balance Sheet for Camosun Developers for December 31, 2011. Accounts payable ……………………………………….. $10,000 Accounts receivable ……………………………………. 260,000 Accumulated Amortization, Building ………………. 370,000 Accumulated Amortization, Furniture & Fixtures . 310,000 Allowance for Doubtful Accounts …………………….. 0,000 Building …………………………………………………….. 900,000 Cash …………………………………………………………. 200,000 Cost of Goods Sold ………………………………………. 75,000 Furniture & Fixtures …………………………………….. 800,000 Interest Expense ……………………………………………. 2,000 Inventory …………………………………………………… 330,000 Land …………………………………………………………. 740,000 Notes payable (due in 5 years) ……………………….. 3,000 Prepaid expenses …………………………………………. 30,000 Sales Returns and Allowances …………………………. 1,500 Note Receivable …………………………………………… 90,000 Unearned revenue ………………………………………… 25,000 Withdrawals …………………………………………………. 36,000 Balance Sheet There is no representation that the practice questions reflect the actual exam questions. 5|Page Camosun College Financial Accounting Acct110 PRACTICE Final Exam B. Edwards

Question Five: Merchandising operations (15 minutes) Read each transaction and record the appropriate journal entry for Hiller Bookstore, which uses the perpetual inventory method. Explanations are NOT required. 1. Jan 5. Purchased books from Wiley Publishing at a cost $10,000 on account with terms 2/10, n/30. 2. Jan 7. Hiller paid freight costs of $100 on the Wiley purchase. 3. Jan 10. Hiller returned $2,000 of books from the Wiley purchase. 4. Jan 12. Hiller sold $2,000 of books to Camosun on account. Cost of the books was $1,600. 5. Jan 13 Hiller paid Wiley. Date Account Debit Credit Calculations:

There is no representation that the practice questions reflect the actual exam questions. 6|Page Camosun College Financial Accounting Acct110 PRACTICE Final Exam B. Edwards Question Six: Various journal entries (15 minutes) 1. On December 15, 2011 the payroll register of Seaside Architecture Inc. indicates $718 of CPP Contributions and $251 of EI contributions withheld on total salaries of $14,500 for the period. Taxes of $2,900 were deducted. Provide the journal entries to record the payroll and the employer’s payroll deduction expense for the period. 2. The bank statement for Gatlin Co. ndicates a balance of $7,735. 00 on June 30, 2011 although the General ledger indicated the bank account had a balance of $4,098. 00. Record the journal entry that would result after reconciling the bank account. a. Cash sales of $742 had been erroneously recorded as $724. b. Deposits in transit not recorded by bank, $425. 00. c. Bank debit memo for service charges, $35. 00. d. Bank credit memo for note collected by bank, $2,475 including $75 interest. e. Bank debit memo for $256. 00 NSF (not sufficient funds) cheque from a customer. f. Cheques outstanding, $1,860. 00. Date Account Debit Credit

There is no representation that the practice questions reflect the actual exam questions. 7|Page Camosun College Financial Accounting Acct110 PRACTICE Final Exam B. Edwards Question Seven: Closing Entries (15 minutes) The following accounts were taken from the adjusted trial balance Deja Co. on December 31, 2011. Write the closing entries. Account Accounts payable Accounts receivable Accumulated amortization, equipment Amortization expense Cash Cost of goods sold Equipment E. Deja, capital E. Deja, withdrawals Rental revenue Inventory Interest expense Note payable Wage expense Wages payable Prepaid rent Sales Sales discounts Unearned revenue

Debit $ 52,200 Credit $ 15,000 9,000 1,800 8,000 130,000 18,000 99,500 20,000 800 84,400 600 20,000 43,000 500 2,000 250,000 1,800 3,000 Date Account Debit Credit There is no representation that the practice questions reflect the actual exam questions. 8|Page Camosun College Financial Accounting Acct110 PRACTICE Final Exam B. Edwards Question Eight: Income Statement (15 minutes) At year-end December 31, 2012, the balances of the accounts appearing in the ledger of The Bent Needle Company, a furniture wholesaler, are as follows.

Prepare a multiple-step income statement. Administrative Expenses $ 125,000 Building 512,500 Cash 48,500 Cost of Goods Sold 700,000 Interest Expense 7,500 Jason Ritchie, Capital 568,580 Jason Ritchie, Withdrawals 25,000 Inventory 130,000 Notes Payable 25,000 Office Supplies 10,600 Salaries Payable 3,220 Sales 1,275,000 Sales Discounts 20,000 Sales Returns & Allowances 80,000 Selling Expenses 205,000 Store Supplies 7,700 There is no representation that the practice questions reflect the actual exam questions. 9|Page

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