Accounting 2301 Final Exam Review Examples

1. Lin Wo Corporation had a balance in Retained Earnings on December 31, 2009, of $360,000. During 2010, the
company reported a net income of $24,000 after taxes. During 2010, the company declared and paid cash
dividends totaling $18,000. Prepare the company's statement of retained earnings for the year ended December
31, 2010.

2. Indicate by letter whether each item below would appear on the income statement (IS), balance sheet (BS), or
statement of retained earnings (E).

________ a. Common Stock

________ b. Dividends
________ c. Wages Expense
________ d. Commissions Earned
________ e. Buildings
________ f. Accounts Payable
________ g. Utilities Expense
________ h. Beginning Retained Earnings
________ i. Accounts Receivable
________ j. Notes Payable

3. Use the following accounts and information to prepare, in good form, an income statement, statement of retained
earnings, and balance sheet for Cray Enterprises for the year ended December 31, 2010.

Accounts Payable $4,800 Land $39,000

Accounts Receivable 600 Notes Payable 6,000
Buildings 52,000 Rent Expense 3,600
Cash 26,200 Retained Earnings, 84,400
December 31, 2009
Commissions Earned 19,000 Salaries Expense 8,400
Common Stock 20,000 Supplies 400
Dividends 3,000
Insurance Expense 1,000

4. Use the following accounts and information to prepare, in good form, an income statement, statement of retained
earnings, and balance sheet for Hometown Industries for the month ended July 31, 2010.

Accounts Payable $3,100 Land $35,000

Accounts Receivable 1,400 Notes Payable 3,300
Buildings 22,000 Rent Expense 2,400
Cash 15,600 Retained Earnings, June 57,900
30, 2010
Commissions Earned 12,700 Salaries Expense 10,000
Common Stock 20,000 Supplies 400
Dividends 8,000
Insurance Expense 2,200

5. Use the following accounts and balances to prepare a balance sheet for Havrilla Company at December 31, 2010.

Accounts Payable $10,000

Common Stock 12,000
Cash 4,800
Retained Earnings 2,400
Equipment 13,200
Accounts Receivable 6,400
 6. For each item below, indicate whether a debit or a credit applies.

a. Decrease in Accounts Payable

b. Decrease in Land
c. Increase in Retained Earnings
d. Increase in Unearned Revenue
e. Decrease in Interest Payable
f. Increase in Prepaid Insurance
g. Increase in Wages Expense
h. Decrease in Art Supplies
i. Increase in Advertising Fees Earned

7. For each item below, indicate whether a debit or a credit applies.

a. Increase in Art Fees Earned

b. Decrease in Prepaid Rent
c. Decrease in Unearned Fees
d. Increase in Common Stock
e. Increase in Depreciation Expense, Buildings
f. Increase in Interest Receivable
g. Decrease in Retained Earnings
h. Increase in Dividends
i. Increase in Notes Payable

8. Indicate whether each account below has a normal debit or a normal credit balance.

a. Automobiles g. Dividends
b. Accounts Payable h. Retained Earnings
c. Common Stock i. Land
d. Prepaid Rent j. Interest Payable
e. Advertising Expense k. Notes Receivable
f. Service Revenue

9. Indicate whether each account below has a normal debit or a normal credit balance.

a. Cash g. Interest Receivable

b. Wages Payable h. Store Equipment
c. Wages Expense i. Legal Fees Earned
d. Unearned Fees j. Common Stock
e. Prepaid Insurance k. Depreciation Expense, Buildings
f. Notes Payable

10. In the journal provided, prepare journal entries without explanations for the following transactions. Write “no
entry” if none is needed.

a. Received a $1,500 invoice for this month's rent. Payment will not be made right away.
b. Paid $1,600 for insurance premiums to cover the next six months.
c. A $350 dividend is declared and paid.
d. The rent of a is paid.
e. Purchased land for $60,000. The company paid half in cash and issued a promissory note for the other half.
11. From the following alphabetical list of account balances, all of which are normal, for Kasper Corporation on July
31, 2010, prepare a trial balance in proper form (the amount of Dividends must be computed).

Accounts Payable $500

Accounts Receivable 200
Cash 80
Common Stock 90
Dividends ?
Equipment 700
Prepaid Advertising 20
Retained Earnings 60
Revenue Earned 400
Wages Expense 70
Wages Payable 50

12. From the following alphabetical list of account balances, all of which are normal, for Aloha Corporation on
September 30, 2010, prepare a trial balance in proper form (the amount of Dividends must be computed).

Accounts Payable $ 780

Accounts Receivable 460
Cash 400
Common Stock 800
Dividends ?
Equipment 1,380
Prepaid Advertising 20
Retained Earnings 400
Revenue Earned 1,000
Wages Expense 60
Wages Payable 20

13. Using the alphabetical list of account balances presented below, all of which are normal, prepare a trial balance
for T. and C. Corporation at June 30, 2010, in proper order. Compute the balance of the Cash account.

Accounts Payable $140

Accounts Receivable 280
Cash ?
Common Stock 200
Equipment 400
Office Expense 180
Retained Earnings 240
Service Revenue 300

14. In the journal provided, prepare journal entries (in good form) for the following transactions. If no entry is
required, write “no entry.” Omit explanations.

May 1 Investors opened a dry cleaning service, called Junction Cleaners, by depositing
$100,000 into a business bank account and receiving 50,000 shares of $2 par value
stock in exchange.
3 Paid two years' rent in advance, $11,200.
6 Purchased dry cleaning equipment for $36,000. Paid $14,000 in cash, the
remainder to be paid in two weeks.
10 Hired a worker, to be paid $550 per week.
17 Paid the worker's weekly wage.
17 Recorded cash received for services rendered during the week, $5,000.
20 Paid for the remainder of the equipment purchased on May 6.
21 Received $240 in advance of cleaning and boxing a wedding gown.
23 Performed $390 of dry cleaning services for Tuxedos Unlimited. It will remit
 payment in three days.
24 Paid the weekly wages.
26 Received payment from Tuxedos Unlimited.
30 Received a telephone bill for $114, which will be paid in two weeks.

15. In the journal provided, prepare journal entries (in good form) for the following transactions. If no entry is
required, write “no entry.” Omit explanations.

Mar. 1 Investors opened a dance school, called Yolonda's Dance Studio, by depositing
$15,000 into a business bank account in exchange for 15,000 shares of $1 par
value stock.
2 Paid three months' rent in advance, $1,800.
4 Hired a part-time assistant, to be paid $250 per week, starting next week.
6 Purchased sound equipment for $2,000. Paid $400 in cash, the remainder to be
paid in installments of $800 every two weeks.
8 Signed up five students, who will begin lessons on March 10, at $80 per week
per student.
17 Received the first week's tuition from four students; the fifth student will remit
payment in three days.
17 Paid the assistant his first week's wages.
20 Received payment from the fifth student.
21 Paid the first installment on the sound equipment purchased on March 6.
23 Received an electric bill of $100, to be paid April 1.

16. In the journal provided, prepare journal entries (in good form) for the following transactions. If no entry is
required, write “no entry.” Omit explanations.

Nov. 1 Investors opened a dance school called Olga's Dance Studio by depositing
$24,000 into a business bank account in exchange for 24,000 shares of $1 par
value stock.
2 Paid three months' rent in advance, $2,400.
4 Hired a part-time assistant, to be paid $275 per week.
6 Purchased sound equipment for $4,200. Paid $600 in cash, the remainder to be
paid in installments of $1,200 every two weeks.
8 Signed up ten students, who will begin lessons on November 10, at $100 per
week per student.
17 Received the first week's tuition from nine students; the tenth student will remit
payment in three days.
17 Paid the assistant his first week's wages.
20 Received payment from the tenth student.
20 Paid the next installment on the sound equipment purchased on November 6.
23 Received an electric bill of $150, to be paid on December 1.

17. In the journal provided, prepare adjusting entries for the following items. Omit explanations.

a. Depreciation on machinery is $940 for the accounting period.

b. Interest incurred on a loan but not paid or recorded is $635.
c. Office supplies of $600 were on hand at the beginning of the period. Purchases of office supplies during the
period totaled $200. At the end of the period, $140 in office supplies remained.
d. Commissions amounting to $540 were earned but not recorded or collected by year end.
e. Prepaid Rent had an $8,000 normal balance prior to adjustment. By year end, 50 percent had expired.
f. Federal income taxes for the year are estimated to be $3,250.
18. In the journal provided, prepare adjusting entries for the following items. Omit explanations.

a. Unrecorded interest on savings bonds is $680.

b. Property taxes incurred but not paid or recorded amount to $540.
c. Legal fees of $5,000 were collected in advance. By year end, 80 percent were still unearned.
d. Prepaid Insurance had a $1,600 debit balance prior to adjustment. By year end, 25 percent was still unexpired.
e. Salaries incurred by year end but not yet paid or recorded amounted to $1,375.
f. Services totaling $900 have been performed but not yet recorded or billed.

19. In the journal provided, prepare year-end adjustments for the following situations. Omit explanations.

a. Accrued interest on notes receivable is $105.

b. Of the $12,000 received in advance of earning a service, one-third was still unearned by year end.
c. Three years' rent, totaling $36,000, was paid in advance at the beginning of the year.
d. Services totaling $5,300 had been performed, but not yet billed.
e. Depreciation on trucks totaled $3,400 for the year.
f. Supplies available for use totaled $690. However, by year end, only $100 in supplies remained.
g. Payroll for the five-day work week, to be paid on Friday, is $30,000. Year end falls on a Monday.
h. Estimated federal income taxes were $4,160.

20. In the journal provided, prepare year-end adjustments for the following situations. Omit explanations.

a. Accrued interest on notes receivable is $560.

b. Of the $7,200 received in advance of earning a service, one-third was still unearned by year end.
c. Two years of rent, totaling $24,000, was paid in advance. By year end, four months' worth had expired.
d. Services totaling $685 had been performed, but not yet billed.
e. Depreciation on trucks totaled $1,700 for the year.
f. Supplies available for use during the year amounted to $3,400. However, by year end, only $700 in supplies
remained.
g. Payroll for the five-day work week, to be paid on Friday, is $6,000. Year end falls on a Tuesday.
h. Estimated federal income taxes were $2,100.

21. Use the following unadjusted trial balance to prepare adjusting entries, given the additional information below it.
Assume financial statements are prepared quarterly. Omit explanations.

Crivelli Financial Services

Unadjusted Trial Balance
September 30, 2010
Cash $ 20,000
Accounts Receivable 6,400
Office Supplies 1,000
Prepaid Rent 3,600
Office Furniture 9,600
Accumulated Depreciation–Office Furniture $ 400
Accounts Payable 14,800
Unearned Revenue 2,000
Common Stock 20,400
Consulting Revenue 12,000
Salaries Expense 7,400
Insurance Expense 1,600 _______
$49,600 $49,600

a. Of the revenue received in advance, 60 percent remained unearned on September 30.

 b. The office furniture has an estimated five-year useful life and zero value at the end of that time. Record
depreciation for the quarter.
c. Salaries earned, but unpaid, totaled $1,520.
d. The Prepaid Rent applies to the six months beginning July 1, 2010.
e. Office supplies on hand totaled $300 at the end of the quarter.
f. Services performed but not yet billed or recorded amount to $1,800.

22. Use the following unadjusted trial balance to prepare adjusting entries, given the additional information below it.
Assume that financial statements are prepared quarterly. Omit explanations.

Shayna's Financial Services

Unadjusted Trial Balance
September 30, 2010
Cash $ 30,000
Accounts Receivable 9,600
Office Supplies 1,600
Prepaid Rent 5,400
Office Furniture 14,400
Accumulated Depreciation–Office Furniture $ 600
Accounts Payable 22,200
Unearned Revenue 3,000
Common Stock 30,600
Consulting Revenue 18,000
Salaries Expense 11,000
Insurance Expense 2,400 _______
$74,400 $74,400

a. Of the revenue received in advance, 60 percent remained unearned on September 30.

b. The office furniture has an estimated 12-year useful life and zero value at the end of that time. Record
depreciation for the quarter.
c. Salaries earned, but unpaid, totaled $2,600.
d. The Prepaid Rent applies to the six months beginning July 1, 2010.
e. Office supplies on hand totaled $600 at the end of the quarter.
f. Services performed but not yet billed or recorded amount to $3,000.

23. Prepare year-end adjusting entries for each of the following situations:

a. The Store Supplies account showed a beginning debit balance of $400 and purchases of $2,800. The ending
debit balance was $800.
b. Depreciation on buildings is estimated to be $7,300.
c. A one-year insurance policy was purchased for $2,400. Nine months have passed since the purchase.
d. Accrued interest on notes payable amounted to $200.
e. The company received a $9,600 advance payment during the year on services to be performed. By the end of
the year, one-third of the services had been performed.
f. Payroll for the five-day workweek, to be paid on Friday, is $10,000. The last day of the period is a Tuesday.
g. Services totaling $920 had been performed but not yet billed or recorded.

24. Prepare year-end adjusting entries for each of the following situations.

a. The Office Supplies account showed a beginning debit balance of $600 and purchases of $1,000. The ending
debit balance was $400.
b. Depreciation on buildings is estimated to be $7,600.
c. A one-year insurance policy was purchased for $6,000. Four months have passed since the purchase.
d. Accrued interest on notes payable amounted to $1,500.
 e. The company received a $14,400 advance payment during the year on services to be performed. By the end of
the year, two-thirds of the services had been performed.
f. Payroll for the five-day workweek, to be paid on Friday, is $14,000. The last day of the period is a Wednesday.
g. Services totaling $780 had been performed but not yet billed or recorded.

25. Below are the adjusted accounts of Millennium Realtors, Inc., for the month ended May 31, 2010, 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).

26. Below are the adjusted accounts of Slate Realtors, Inc., for the month ended Oct. 31, 2010, listed in alphabetical
order:

Accounts Payable $ 1,100 Dividends $ 1,500

Accounts Receivable 4,800 Income Taxes Expense 100
Accumulated Depreciation– Income Taxes Payable 100
Office Equipment 6,000 Office Equipment 15,000
Cash 2,400 Prepaid Rent 2,200
Commissions Revenue 10,800 Retained Earnings 8,000
Common Stock 4,000 Salaries Expense 3,500
Depreciation Expense– Utilities Expense 200
Office Equipment 300

In the journal provided, prepare Slate's closing entries (omit explanations).

27. Prepare closing entries for December from the following Income Statement columns of the work sheet of Custom
Cleaning Service, Inc., assuming that a $500 dividend was paid during the period (omit explanations).

Income Statement
Debit Credit
Cleaning Revenue 2,600
Wages Expense 1,200
Rent Expense 400
Supplies Expense 300
Income Taxes Expense 40
1,940 2,600
Net Income 660
2,600 2,600

28. From the following items in the Income Statement columns of the work sheet of ElKay Corporation at December
31, 2010, prepare the closing entries, assuming that a $75 dividend was paid during the period (omit
explanations).

Income Statement
 Debit Credit
Service Revenue 1,800
Wages Expense 1,200
Rent Expense 400
Supplies Expense 200
Income Taxes Expense 100
Depreciation Expense–Building 150
2,050 1,800
Net Loss 250
2,050 2,050

29. From the following items in the Income Statement columns of the work sheet of Antin Corporation at December
31, 2010, prepare the closing entries, assuming that a $50 dividend was paid during the period (omit
explanations).

Income Statement
Debit Credit
Service Revenue 3,000
Wages Expense 1,800
Rent Expense 600
Supplies Expense 300
Income Taxes Expense 150
Depreciation Expense–Building 250
3,100 3,000
Net Loss 100
3,100 3,100

30. Sandy's Supply Store, Inc., entered into the transactions listed below. In the journal provided, prepare Sandy's
entries, assuming use of the perpetual inventory system. Omit explanations.

Mar. 2Purchased $900 of merchandise on credit, terms n/30.

6Returned $150 of the items purchased on March 2.
8Paid freight charges of $50 on the items purchased March 2.
16Sold merchandise on credit for $1,200, terms n/15. The merchandise had a cost
in inventory of $750.
17Of the merchandise sold on March 16, $100 of it was returned. The items had
cost Sandy's $30.
25Received payment in full from the customer of March 16.
31Paid for the merchandise purchased on March 2.

31. Scuilli Corporation purchased $5,000 worth of merchandise, terms n/30, from the Zupcic Corporation on June 4.
The cost of the merchandise to Zupcic was $3,600. On June 10, Scuilli returned $700 worth of goods to Zupcic
for full credit. The goods had a cost of $450 to Zupcic. On June 12, the account was paid in full. Prepare journal
entries without explanations to record these transactions in (a) Scuilli's records and (b) Zupcic's records. Assume
use of the perpetual inventory system by both companies.
a. Scuilli's records:

b. Zupcic's records:

32. For each of the items below, use the following letters to identify the correct treatment in a bank reconciliation.
 A = Add to balance per bank C = Add to balance per books
B = Deduct from balance per bank D = Deduct from balance per books

____ 1. Interest income

____ 2. Outstanding checks
____ 3. Check written for $89, but $98 recorded in books
____ 4. Customer's NSF check
____ 5. Note receivable collected by bank
____ 6. Deposit made for $70, but $700 recorded in books
____ 7. Bank check-printing charge
____ 8. Check written for $52, but $25 recorded in books
____ 9. Deposits in transit
____ 10. Bank fee for collection on note receivable

33. On December 31, Skinner Enterprises has a $400 debit balance in Allowance for Uncollectible Accounts. If an
accounts receivable aging method analysis indicated that an estimated $3,200 of December 31 receivables are
uncollectible, for what amount would the adjusting entry for uncollectible accounts be recorded? (Show your
work.)

34. On December 31, Alsop Products has a $300 credit balance in Allowance for Uncollectible Accounts. It estimates
that 4 percent of the $60,000 in sales are uncollectible. After the appropriate adjusting entry for uncollectible
accounts has been made using percentage of net sales method, what will be the balance in Allowance for
Uncollectible Accounts? Indicate if the balance is a debit or credit. (Show your work.)

35. At year end, Erwin Graphics has a $350 debit balance in Allowance for Uncollectible Accounts. It estimates that
5 percent of the $20,000 in sales are uncollectible. Give the amount that should be used in the adjusting entry
using percentage of net sales method to record uncollectible accounts. (Show your calculations.)

36. Caplan Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense.
As of December 31, Caplan's accountant prepared the following data about ending receivables: $20,000 was not
yet due (1 percent expected not to be collected), $10,000 was 1-60 days past due (4 percent expected not to be
collected), and $2,000 was over 60 days past due (8 percent expected not to be collected). At December 31,
Allowance for Uncollectible Accounts had a credit balance prior to adjustment of $200. In the journal provided,
prepare Caplan's end-of-period adjustment for estimated uncollectible accounts. Also prepare the entry that would
have been made had the credit balance instead been a debit balance. Omit explanations.

37. Assuming that the allowance method is being used, prepare journal entries to record the following transactions.
Omit explanations.

Mar. 15 Sold merchandise to Faust for $6,000 on account.

Apr. 15 Received $3,000 from Faust.
Aug. 15 Wrote off Faust's account as uncollectible.
Nov. 15 Unexpectedly received payment in full from Faust.

38. In the journal provided, prepare the entries for the following transactions. (Omit explanations.)

Dec. 1 Sold merchandise on account to Katurah Wells for $600.

12 Received payment of $400 from Katurah Wells.
31 Made adjusting entry for Uncollectible Accounts Expense, using the
percentage of net sales method. Net sales for the year totaled $14,000,
uncollectible accounts are estimated at 2 percent, and Allowance for
Uncollectible Accounts has a $50 credit balance prior to adjustment.
Feb. 5 Wrote off Katurah Wells's balance because she filed for bankruptcy.
17 Unexpectedly received the $200 from Katurah Wells.
39. Press Corporation purchased a truck for $40,000. The company expected the truck to last four years or 100,000
miles, with an estimated residual value of $4,000 at the end of that time. During the second year, the truck was
driven 27,500 miles. Compute the depreciation for the second year under each of the following methods: (a)
straight-line, (b) production, and (c) double-declining-balance. (Show your work.)

40. Saticoy Corporation purchased a truck for $50,000. The company expected the truck to last five years or 100,000
miles, with an estimated residual value of $5,000 at the end of that time. During the second year, the truck was
driven 23,000 miles. Compute the depreciation for the second year under each of the following methods: (a)
straight-line, (b) production, and (c) double-declining-balance. (Show your work.)

41. Speedy Printing purchased a new printing press for $80,000. It depreciates the press over a five-year period, using
the double-declining-balance method of depreciation. If the press has an $8,000 estimated residual value,
calculate depreciation expense for each of the five years. (Show your work.)

42. On January 2, 2009, Topanga Company purchased a machine for $90,000. The machine has a five-year estimated
useful life and a $6,000 estimated residual value. In addition, the company expects to use the machine 200,000
hours. Assuming that the machine was used 35,000 hours during 2010, complete the following chart. If a figure
cannot be determined, indicate so by placing an X in the box. (Show your work.)

Method Depreciation Expense for Carrying Value at 12/31/10

2010
Straight-line
Production
Double-declining-balance

43. On January 2, 2009, Vanowen Company purchased a machine for $80,000. The machine has an eight-year
estimated useful life and an $8,000 estimated residual value. In addition, the company expects to use the machine
200,000 hours. Assuming that the machine was used 35,000 hours during 2010, complete the following chart. If a
figure cannot be determined, indicate so by placing an X in the box. (Show your work.)

Method Depreciation Expense for Carrying Value at 12/31/10

2010
Straight-line
Production
Double-declining-balance

44. Poquito Corporation had both the following transactions occur on the same day:
1. Issued 30,000 shares of its $5 par value common stock for $360,000 cash.
2. Issued 10,000 shares of its $5 par value common stock in exchange for land and a building. The building is
estimated to have a market value of $90,000.
Prepare the entries in journal form to record the above transactions. Omit explanations, but show computations.

45. Stonehurst Corporation is authorized to issue 100,000 shares of $5 stated value common stock and 2,000 shares of
$100 par value, 6 percent preferred stock. Prepare entries in journal form without explanations to record the
following transactions:
July 15 Issued 1,000 shares of common stock to an attorney for a bill of $7,000 in
connection with the organization of the corporation.
25 Issued 2,000 shares of preferred stock for cash of $120 per share.
27 Issued 10,000 shares of common stock in exchange for land for a plant site
valued at $75,000.
Aug. 1 Issued 5,000 shares of common stock for $35,000 in cash.
 46. Brandt Corporation is authorized to issue 100,000 shares of $5 stated value common stock and 2,000 shares of
$100 par value, 8 percent preferred stock. Prepare entries in journal form without explanations to record the
following transactions:

Apr. 15 Issued 1,000 shares of common stock to an attorney for a bill of $9,000 in
connection with the organization of the corporation.
25 Issued 1,000 shares of preferred stock for cash of $115 per share.
27 Issued 8,000 shares of common stock in exchange for land for a plant site
valued at $50,000.
May 1 Issued 15,000 shares of common stock for $90,000 in cash.
Matching

Match the terms below with the correct definitions.

a. Chart of accounts
b. Journalizing
c. General ledger account
d. General ledger
e. Journal
f. Source documents
g. Posting
h. Account number
i. General journal
j. Cost principle
____ 47. Number assigned to an account
____ 48. Process of recording transactions in a journal
____ 49. Process of transferring accounts and amounts from journal to ledger
____ 50. Recording assets at actual cost
____ 51. Official list of all ledger accounts
____ 52. A book containing all the accounts of an enterprise
____ 53. Book of original entry
____ 54. Business papers supporting transactions
____ 55. Complete record of transactions recorded in each individual account
____ 56. Journal that has one column for debit amounts and one column for credit amounts

Problem

57. On December 31, the ledger accounts of Barsky Repair have the following balances after all adjusting entries
have been posted.

Cash $ 1,700
Equipment 5,300
Accumulated Depreciation, Equipment 1,200
Accounts Payable 400
R. Barsky, Capital 6,700
R. Barsky, Drawing 16,300
Income Summary
Income from Services 24,900
Wages Expense 1,600
Rent Expense 3,600
Utilities Expense 1,100
Depreciation Expense, Equipment 600
 Supplies Expense 2,600
Miscellaneous Expense 400

Instructions:
Journalize the four closing entries in the proper order.

58. Below is an alphabetical list of accounts of Master Cleaners as of December 31, after all adjusting entries have
been posted.

Accounts Payable $ 2,700

Accumulated Depreciation, Equipment 2,800
Cash 2,600
Depreciation Expense, Equipment 700
E. Hess, Capital 7,000
E. Hess, Drawing 16,800
Equipment 12,300
Income from Services 29,800
Income Summary
Insurance Expense 1,600
Miscellaneous Expense 300
Prepaid Insurance 200
Rent Expense 2,400
Supplies Expense 900
Utilities Expense 800
Wages Expense 3,700

Instructions:
Journalize the four closing entries in the proper order.

59. The December 31 year-end ledger balances for Quick Delivery are presented below.

Account Name Debit Credit

Cash $ 4,160
Accounts Receivable 2,420
Prepaid Insurance 120
Truck 50,000
Accumulated Depreciation, Truck $21,120
Accounts Payable 1,650
Wages Payable 980
C. P. Greg, Capital 42,960
C. P. Greg, Drawing 36,090
Income from Services 72,640
Wages Expense 35,620
Rent Expense 3,600
Advertising Expense 570
Utilities Expense 1,140
Miscellaneous Expense 490
Supplies Expense 410
Insurance Expense 810
Depreciation Expense, Truck 3,920

Instructions:
Journalize the four closing entries in the proper order.

60.On January 1 of this year, Carter Company had a credit balance of $718 in Allowance for Doubtful Accounts. During the
year, Carter Company completed the following transactions:
 Apr. 2 Wrote off the account of S. Bang as uncollectible, $1,327.
Oct. 14 Received $765 unexpectedly from K. Parks, whose account had been written off
one year earlier in the amount of $765. Reinstated the account and recorded the
collection of $765.
Dec. 2 Collected 10 percent of the $1,810 owed by R. Stone, a bankrupt customer. Wrote
off the remainder as worthless.
3 Journalized a compound entry to write off the following accounts as uncollectible:
G. Gold, $384; W. Karchner, $1,370; B. Crantz, $915.
31
Recorded the adjusting entry for estimating bad debt losses at percent of net
credit sales of $286,558.

Instructions:
Record the entries in a general journal (page 18).

61. The following are among the transactions completed by Kantz Company this year:

Feb. 16 Wrote off as uncollectible the account of Garthe Company, $1,341. The company
had gone out of business, leaving no assets.
Mar. 10 Reinstated the account of F. Norman, which had been written off in the preceding
year; received $352 in full payment of account.
June 5 Received $800 unexpectedly from L. Jacobs, whose account had been written off
last year in the amount of $800. Reinstated the account and recorded the collection
of $800.
Sept. 15 Journalized a compound entry to write off the following accounts as uncollectible:
R. Singh, $655; K. Martin, $1,050; C. Rowe, $845.
Dec. 31 On the basis of an aged analysis of Accounts Receivable of $77,367.23, estimated
that $5,239 will be uncollectible.

Instructions:
1. Open Allowance for Doubtful Accounts with a credit balance of $4,368, account no.
114.
2. Record in a general journal, page 27, the transactions and adjusting entry. After each
entry, post to Allowance for Doubtful Accounts.
3. Prepare the Current Assets section of the balance sheet. Other pertinent accounts are:
Cash, $15,643; Accounts Receivable, $86,450; Merchandise Inventory, $136,850;
Supplies, $1,350; and Prepaid Insurance, $1,600.

Other

Classification

62. Indicate whether each of the following changes in accounts would be a debit (D) or credit (C) entry.

To decrease Cash
To increase Owner, Capital
To decrease Accounts Payable
To increase Salaries Expense
To decrease Equipment
To increase Revenue
To decrease Accounts Receivable
To increase Owner, Drawing
To increase Prepaid Insurance
To increase Accounts Payable
63. Classify each of the following items as to whether they would appear on a balance sheet (BS), income statement
(IS), or neither (N).

Accounts Payable
Accounts Receivable
Advertising Expense
Cash
Equipment
Income from Tours
Increase in Capital
Investment during month
J. Collins, Capital
J. Collins, Drawing
Prepaid Insurance
Wages Expense

64. Classify each of the following accounts as to whether they would appear on a balance sheet (BS) or income
statement (IS).

Accounts Payable
Accounts Receivable
Accumulated Depreciation, Equipment
Advertising Expense
Cash
Depreciation Expense, Equipment
Equipment
Income from Tours
Insurance Expense
Owner, Capital
Prepaid Insurance
Rent Expense
Supplies Expense
Utilities Expense
Wages Expense
Wages Payable
Accounting 2301 Final Exam Review Examples
Answer Section

SHORT ANSWER

1. ANS:

Lin Wo Corporation
Statement of Retained Earnings
For the Year Ended December 31, 2010
Retained earnings, December 31, 2009 $360,000
Net income for the year 24,000
Subtotal $384,000
Less dividends 18,000
Retained earnings, December 31, 2010 $366,000

PTS: 1 OBJ: LO6 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: statement of stockholders' equity
2. ANS:
a. BS f. BS
b. E g. IS
c. IS h. E
d. IS i. BS
e. BS j. BS

PTS: 1 OBJ: LO6 NAT: AACSB correlation: analytic

LOC: Learning type: Recall KEY: financial statements
3. ANS:

Cray Enterprises
Income Statement
For the Year Ended December 31, 2010
Revenues
Commissions earned $19,000

Expenses
Insurance expense $1,000
Rent expense 3,600
Salaries expense 8,400 13,000
Net income $ 6,000

Cray Enterprises
Statement of Retained Earnings
For the Year Ended December 31, 2010
Retained earnings, December 31, 2009 $84,400
Net income for the year 6,000
Subtotal $90,400
Less dividends 3,000
Retained earnings, December 31, 2010 $87,400

Cray Enterprises
Balance Sheet
December 31, 2010
Assets Liabilities
 Cash $ 26,200 Accounts payable $ 4,800
Accounts 600 Notes payable 6,000
receivable
Supplies 400 Total liabilities $ 10,800
Land 39,000
Buildings 52,000 Stockholders' Equity
Common stock $20,000
Retained earnings 87,400
Total stockholders' equity 107,400

Total assets $118,200 Total liabilities and stockholders' $118,200

equity

PTS: 1 OBJ: LO6 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: financial statements
4. ANS:

Hometown Industries
Income Statement
For the Month Ended July 31, 2010
Revenues
Commissions earned $12,700

Expenses
Insurance expense $ 2,200
Rent expense 2,400
Salaries expense 10,000 14,600
Net loss ($ 1,900)

Hometown Industries
Statement of Retained Earnings
For the Month Ended July 31, 2010
Retained earnings, June 30, 2010 $57,900
Net loss for the month (1,900)
Subtotal $56,000
Less dividends 8,000
Retained earnings, July 31, 2010 $48,000

Hometown Industries
Balance Sheet
July 31, 2010
Assets Liabilities
Cash $15,600 Accounts payable $ 3,100
Accounts 1,400 Notes payable 3,300
Receivable
Supplies 400 Total liabilities $ 6,400
Land 35,000
Buildings 22,000 Stockholders' Equity
Common stock $20,000
Retained earnings 48,000
Total stockholders' equity 68,000

Total assets $74,400 Total liabilities and Stockholders' $74,400

equity
 PTS: 1 OBJ: LO6 NAT: AACSB correlation: analytic
LOC: Learning type: Application KEY: financial statements
5. ANS:

Havrilla Company
Balance Sheet
December 31, 2010
Assets Liabilities
Cash $ 4,800 Accounts payable $10,000
Accounts 6,400
receivable
Equipment 13,200 Stockholders' Equity
Common stock $12,000
Retained earnings 2,400
Total stockholders' 14,400
equity

Total assets $24,400 Total liabilities and stockholders' $24,400

equity

PTS: 1 OBJ: LO6 NAT: AACSB correlation: analytic

LOC: Learning type: Analysis KEY: balance sheet
6. ANS:
a. Debit
b. Credit
c. Credit
d. Credit
e. Debit
f. Debit
g. Debit
h. Credit
i. Credit

PTS: 1 OBJ: LO2 NAT: AACSB correlation: analytic

LOC: Learning type: Comprehension KEY: T accounts| effects of transactions on accounting equation
7. ANS:
a. Credit
b. Credit
c. Debit
d. Credit
e. Debit
f. Debit
g. Debit
h. Debit
i. Credit

PTS: 1 OBJ: LO2 NAT: AACSB correlation: analytic

LOC: Learning type: Comprehension KEY: T accounts| effects of transactions on accounting equation
8. ANS:
a. Debit g. Debit
b. Credit h. Credit
c. Credit i. Debit
d. Debit j. Credit
 e. Debit k. Debit
f. Credit

PTS: 1 OBJ: LO2 NAT: AACSB correlation: analytic

LOC: Learning type: Comprehension KEY: T accounts| effects of transactions on accounting equation
9. ANS:
a. Debit g. Debit
b. Credit h. Debit
c. Debit i. Credit
d. Credit j. Credit
e. Debit k. Debit
f. Credit

PTS: 1 OBJ: LO2 NAT: AACSB correlation: analytic

LOC: Learning type: Comprehension KEY: T accounts| effects of transactions on accounting equation
10. ANS:

General Journal Page 1

Date Description Post. Debit Credit
Ref.
a. Rent Expense 1,500
Rent Payable (or Accounts Payable) 1,500

b. Prepaid Insurance 1,600

Cash 1,600

c. Dividends 350
Cash 350

d. Rent Payable (or Accounts Payable) 1,500

Cash 1,500

e. Land 60,000
Cash 30,000
Notes Payable 30,000

PTS: 1 OBJ: SO6 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: recording entries
11. ANS:

Kasper Corporation
Trial Balance
July 31, 2010
Cash $ 80
Accounts Receivable 200
Prepaid Advertising 20
Equipment 700
Accounts Payable $ 500
Wages Payable 50
Common Stock 90
Retained Earnings 60
Dividends 30
Revenue Earned 400
Wages Expense 70 ______
$1,100 $1,100
 PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic
LOC: Learning type: Application KEY: post entries and prepare trial balance
12. ANS:

Aloha Corporation
Trial Balance
September 30, 2010
Cash $ 400
Accounts Receivable 460
Prepaid Advertising 20
Equipment 1,380
Accounts Payable $ 780
Wages Payable 20
Common Stock 800
Retained Earnings 400
Dividends 680
Revenue Earned 1,000
Wages Expense 60 ______
$3,000 $3,000

PTS: 1 OBJ: LO4 NAT: AACSB correlation: analytic

LOC: Learning type: Analysis KEY: post entries and prepare trial balance
13. ANS:

T. and C. Corporation
Trial Balance
June 30, 2010
Cash $ 20
Accounts Receivable 280
Equipment 400
Accounts Payable $ 140
Common Stock 200
Retained Earnings 240
Service Revenue 300
Office Expense 180 _____
$880 $880

PTS: 1 OBJ: LO4 NAT: AACSB correlation: analytic

LOC: Learning type: Analysis KEY: post entries and prepare trial balance
14. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
May 1 Cash 100,000
Common Stock 100,000

3 Prepaid Rent 11,200

Cash 11,200

6 Dry Cleaning Equipment 36,000

Cash 14,000
Accounts Payable 22,000

10 No entry
 17 Wages Expense 550
Cash 550

17 Cash 5,000
Dry Cleaning Revenue 5,000

20 Accounts Payable 22,000

Cash 22,000

21 Cash 240
Unearned Dry Cleaning Revenue 240

23 Accounts Receivable 390

Dry Cleaning Revenue 390

24 Wages Expense 550

Cash 550

26 Cash 390
Accounts Receivable 390

30 Telephone Expense 114

Accounts Payable 114

PTS: 1 OBJ: SO6 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: recording entries
15. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
Mar. 1 Cash 15,000
Common Stock 15,000

2 Prepaid Rent 1,800

Cash 1,800

4 No entry

6 Sound Equipment 2,000

Cash 400
Accounts Payable 1,600

8 No entry

17 Cash 320
Accounts Receivable 80
Tuition Revenue 400

17 Wages Expense 250

Cash 250

20 Cash 80
Accounts Receivable 80

21 Accounts Payable 800

 Cash 800

23 Utilities Expense 100

Accounts Payable 100

PTS: 1 OBJ: SO6 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: recording entries
16. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
Nov. 1 Cash 24,000
Common Stock 24,000

2 Prepaid Rent 2,400

Cash 2,400

4 No entry

6 Sound Equipment 4,200

Cash 600
Accounts Payable 3,600

8 No entry

17 Cash 900
Accounts Receivable 100
Tuition Revenue 1,000

17 Wages Expense 275

Cash 275

20 Cash 100
Accounts Receivable 100

20 Accounts Payable 1,200

Cash 1,200

23 Utilities Expense 150

Accounts Payable 150

PTS: 1 OBJ: SO6 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: recording entries
17. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
a. Depreciation Expense-Machinery 940
Accumulated Depreciation-Machinery 940

b. Interest Expense 635

Interest Payable 635
 c. Office Supplies Expense 660
Office Supplies 660

d. Accounts Receivable 540

Commissions Earned 540

e. Rent Expense 4,000

Prepaid Rent 4,000

f. Income Taxes Expense 3,250

Income Taxes Payable 3,250

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: adjust accounts and adjust trial balance| recording entries
18. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
a. Interest Receivable 680
Interest Income 680

b. Property Taxes Expense 540

Property Taxes Payable 540

c. Unearned Legal Fees 1,000

Legal Fees Earned 1,000

d. Insurance Expense 1,200

Prepaid Insurance 1,200

e. Salaries Expense 1,375

Salaries Payable 1,375

f. Accounts Receivable 900

Service Revenue Earned 900

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: adjust accounts and adjust trial balance| recording entries
19. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
a. Interest Receivable 105
Interest Income 105

b. Unearned Revenue 8,000

Service Revenue 8,000

c. Rent Expense 12,000

Prepaid Rent 12,000

d. Accounts Receivable 5,300

Service Revenue 5,300
 e. Depreciation Expense-Trucks 3,400
Accumulated Depreciation-Trucks 3,400

f. Supplies Expense 590

Supplies 590

g. Wages Expense 6,000

Wages Payable 6,000

h. Income Taxes Expense 4,160

Income Taxes Payable 4,160

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: adjust accounts and adjust trial balance| recording entries
20. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
a. Interest Receivable 560
Interest Income 560

b. Unearned Revenue 4,800

Service Revenue 4,800

c. Rent Expense 4,000

Prepaid Rent 4,000

d. Accounts Receivable 685

Service Revenue 685

e. Depreciation Expense–Trucks 1,700

Accumulated Depreciation– 1,700
Trucks

f. Supplies Expense 2,700

Supplies 2,700

g. Wages Expense 2,400

Wages Payable 2,400

h. Income Taxes Expense 2,100

Income Taxes Payable 2,100

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: adjust accounts and adjust trial balance| recording entries
21. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
a. Unearned Revenue 800
Consulting Revenue 800
 b. Depreciation Expense–Office Furniture 480
Accumulated Depreciation– Office 480
Furniture

c. Salaries Expense 1,520

Salaries Payable 1,520

d. Rent Expense 1,800

Prepaid Rent 1,800

e. Office Supplies Expense 700

Office Supplies 700

f. Accounts Receivable 1,800

Consulting Revenue 1,800

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: adjust accounts and adjust trial balance| recording entries
22. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
a. Unearned Revenue 1,200
Consulting Revenue 1,200

b. Depreciation Expense–Office Furniture 300

Accumulated Depreciation– Office 300
Furniture

c. Salaries Expense 2,600

Salaries Payable 2,600

d. Rent Expense 2,700

Prepaid Rent 2,700

e. Office Supplies Expense 1,000

Office Supplies 1,000

f. Accounts Receivable 3,000

Consulting Revenue 3,000

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: adjust accounts and adjust trial balance| recording entries
23. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
a. Store Supplies Expense 2,400
Store Supplies 2,400
Recorded supplies used
($400 + $2,800 – $800 = $2,400)

b. Depreciation Expense–Buildings 7,300

 Accumulated Depreciation–Buildings 7,300
Recorded annual depreciation

c. Insurance Expense 1,800

Prepaid Insurance 1,800
Recorded expired insurance
($2,400  9/12 = $1,800)

d. Interest Expense 200

Interest Payable 200
Recorded accrued interest on
notes payable

e. Unearned Service Revenue 3,200

Service Revenue 3,200
Recorded revenue earned
($9,600  1/3 = $3,200)

f. Wages Expense 4,000

Wages Payable 4,000
Recorded accrued wages
($10,000  2/5 = $4,000)

g. Accounts Receivable 920

Services Revenue 920
Recorded revenue earned but not
received

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: adjust accounts and adjust trial balance| recording entries
24. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
a. Office Supplies Expense 1,200
Office Supplies 1,200
Recorded supplies used
($600 + $1,000 – $400 = $1,200)

b. Depreciation Expense–Buildings 7,600

Accumulated Depreciation–Buildings 7,600
Recorded annual depreciation

c. Insurance Expense 2,000

Prepaid Insurance 2,000
Recorded expired insurance
($6,000  4/12 = $2,000)

d. Interest Expense 1,500

Interest Payable 1,500
Recorded accrued interest on notes
payable

e. Unearned Service Revenue 9,600

Service Revenue 9,600
 Recorded revenue earned
($14,400  2/3 = $9,600)

f. Wages Expense 8,400

Wages Payable 8,400
Recorded accrued wages
($14,000  3/5 = $8,400)

g. Accounts Receivable 780

Services Revenue 780
Recorded revenue earned but not
received

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: adjust accounts and adjust trial balance| recording entries
25. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
May 31 Commissions Revenue 7,500
Income Summary 7,500

31 Income Summary 2,750

Depreciation Expense–Office 200
Equipment
Income Taxes Expense 100
Salaries Expense 2,300
Utilities Expense 150

31 Income Summary 4,750

Retained Earnings 4,750

31 Retained Earnings 1,000

Dividends 1,000

PTS: 1 OBJ: LO5 NAT: AACSB correlation: analytic

LOC: Learning type: Analysis KEY: closing entries| closing of accounts
26. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
Oct 31 Commissions Revenue 10,800
Income Summary 10,800

31 Income Summary 4,100

Depreciation Expense–Office 300
Equipment
Income Taxes Expense 100
Salaries Expense 3,500
Utilities Expense 200

31 Income Summary 6,700

Retained Earnings 6,700
 31 Retained Earnings 1,500
Dividends 1,500

PTS: 1 OBJ: LO5 NAT: AACSB correlation: analytic

LOC: Learning type: Analysis KEY: closing entries| closing of accounts
27. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
Dec. 31 Cleaning Revenue 2,600
Income Summary 2,600

31 Income Summary 1,940

Wages Expense 1,200
Rent Expense 400
Supplies Expense 300
Income Taxes Expense 40

31 Income Summary 660

Retained Earnings 660

31 Retained Earnings 500

Dividends 500

PTS: 1 LOC: Learning type: Application

28. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
Dec. 31 Service Revenue 1,800
Income Summary 1,800

31 Income Summary 2,050

Wages Expense 1,200
Rent Expense 400
Supplies Expense 200
Income Taxes Expense 100
Depreciation Expense–Building 150

31 Retained Earnings 250

Income Summary 250

31 Retained Earnings 75
Dividends 75

PTS: 1 LOC: Learning type: Application

29. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
Dec. 31 Service Revenue 3,000
 Income Summary 3,000

31 Income Summary 3,100

Wages Expense 1,800
Rent Expense 600
Supplies Expense 300
Income Taxes Expense 150
Depreciation Expense–Building 250

31 Retained Earnings 100

Income Summary 100

31 Retained Earnings 50
Dividends 50

PTS: 1 LOC: Learning type: Application

30. ANS:

General Journal Page 1

Post.
Date Description Ref. Debit Credit
Mar. 2 Merchandise Inventory 900
Accounts Payable 900

6 Accounts Payable 150

Merchandise Inventory 150

8 Freight-In 50
Cash 50

16 Accounts Receivable 1,200

Sales 1,200

16 Cost of Goods Sold 750

Merchandise Inventory 750

17 Sales Returns and Allowances 100

Accounts Receivable 100

17 Merchandise Inventory 30
Cost of Goods Sold 30

25 Cash 1,100
Accounts Receivable 1,100

31 Accounts Payable 750

Cash 750

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application
KEY: merchandise purchases transactions| merchandise sales transactions
31. ANS:
a. Scuilli's records:
General Journal Page 1
 Post.
Date Description Ref. Debit Credit
June 4 Merchandise Inventory 5,000
Accounts Payable 5,000

10 Accounts Payable 700

Merchandise Inventory 700

12 Accounts Payable 4,300

Cash 4,300

b. Zupcic's records:
General Journal Page 1
Post.
Date Description Ref. Debit Credit
June 4 Accounts Receivable 5,000
Sales 5,000

4 Cost of Goods Sold 3,600

Merchandise Inventory 3,600

10 Sales Returns and Allowances 700

Accounts Receivable 700

10 Merchandise Inventory 450

Cost of Goods Sold 450

12 Cash 4,300
Accounts Receivable 4,300

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Analysis
KEY: merchandise purchases transactions| merchandise sales transactions
32. ANS:
1. C
2. B
3. C
4. D
5. C
6. D
7. D
8. D
9. A
10. D

PTS: 1 OBJ: LO2 NAT: AACSB correlation: analytic

LOC: Learning type: Analysis KEY: bank reconciliation
33. ANS:
$3,600 ($3,200 + $400)

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: accounts receivable
34. ANS:
$2,700 credit ($60,000  4/100 = $2,400 + $300)

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

 LOC: Learning type: Application KEY: accounts receivable
35. ANS:
$1,000 credit to Allowance for Uncollectible Accounts ($20,000  5/100)

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: accounts receivable
36. ANS:

General Journal Page 1

Date Description Post. Debit Credit
Ref.
Dec. 31 Uncollectible Accounts Expense 560
Allowance for Uncollectible Accounts 560
Entry assuming $200 credit balance.
[($20,000  1/100) + ($10,000  4/100) +
($2,000  8/100)] – $200

31 Uncollectible Accounts Expense 960

Allowance for Uncollectible Accounts 960
Entry assuming $200 debit balance.
[($20,000  1/100) + ($10,000  4/100) +
($2,000  8/100)] + $200

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: accounts receivable
37. ANS:

General Journal Page 1

Date Description Post. Debit Credit
Ref.
Mar. 15 Accounts Receivable 6,000
Sales 6,000

Apr. 15 Cash 3,000

Accounts Receivable 3,000

Aug. 15 Allowance for Uncollectible Accounts 3,000

Accounts Receivable 3,000

Nov. 15 Accounts Receivable 3,000

Allowance for Uncollectible Accounts 3,000

15 Cash 3,000
Accounts Receivable 3,000

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: accounts receivable
38. ANS:

General Journal Page 1

Date Description Post. Debit Credit
Ref.
Dec. 1 Accounts Receivable 600
Sales 600
 12 Cash 400
Accounts Receivable 400

31 Uncollectible Accounts Expense 280

Allowance for Uncollectible Accounts 280

Feb. 5 Allowance for Uncollectible Accounts 200

Accounts Receivable 200

17 Accounts Receivable 200

Allowance for Uncollectible Accounts 200

17 Cash 200
Accounts Receivable 200

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: accounts receivable
39. ANS:
a. $9,000 ($40,000 – $4,000 = $36,000 ÷ 4)
b. $9,900 ($36,000 ÷ 100,000 = $0.36  27,500)
c. $10,000 (100% ÷ 4 = 25%  2 = 50%  $40,000 = $20,000; $40,000 – $20,000 = $20,000  50% = $10,000)

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: depreciation
40. ANS:
a. $9,000 ($50,000 – $5,000 = $45,000 ÷ 5)
b. $10,350 ($45,000 ÷ 100,000 = $0.45  23,000)
c. $12,000 (100% ÷ 5 = 20%  2 = 40%  $50,000 = $20,000; $50,000 – $20,000 = $30,000  40% = $12,000)

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: depreciation
41. ANS:
Year 1: $32,000 (100% ÷ 5 = 20%  2 = 40%  $80,000)
Year 2: $19,200 ($80,000 – $32,000 = $48,000  .4)
Year 3: $11,520 ($48,000 – $19,200 = $28,800  .4)
Year 4: $6,912 ($28,800 – $11,520 = $17,280  .4)
Year 5: $2,368 ($17,280 – $6,912 = $10,368 – $8,000)

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: depreciation
42. ANS:
Method Depreciation Expense for 2010 Carrying Value at
12/31/10
Straight-line $16,800 a
$56,400b
Production 14,700
c X .
Double-declining-balance 21,600d 32,400e

a ($90,000 – $6,000) ÷ 5
b $90,000 – (2  $16,800)
c $84,000 ÷ 200,000 = $.42  35,000
d $90,000  40% = $36,000; $90,000 – 36,000 = $54,000  40%
e $90,000 – $36,000 – $21,600
 PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic
LOC: Learning type: Application KEY: depreciation
43. ANS:
Method Depreciation Expense for 2010 Carrying Value at
12/31/10
Straight-line $ 9,000 a
$62,000b
Production 12,600c X
Double-declining-balance 15,000d 45,000e

a$80,000 – $8,000 = $72,000 ÷ 8

b$80,000 – (2  $9,000)
c$72,000 ÷ 200,000 = $0.36  35,000
d$80,000  25% = $20,000; $80,000 - $20,000 = $60,000  25%
e$80,000 – $20,000 – $15,000

PTS: 1 OBJ: LO3 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: depreciation
44. ANS:

General Journal Page 1

Date Description Post. Debit Credit
Ref.
1. Cash 360,000
Common Stock 150,000
Additional Paid-in Capital 210,000
$5  30,000 = $150,000
$360,000 – $150,000 = $210,000

b. Land 30,000
Building 90,000
Common Stock 50,000
Additional Paid-in Capital 70,000
$360,000 ÷ 30,000 = $12 per share
10,000  $12 = $120,000
$120,000 – $90,000 = $30,000
10,000  $5 = $50,000
$120,000 – $50,000 = $70,000

PTS: 1 OBJ: LO4 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: stock issuance
45. ANS:

General Journal Page 1

Date Description Post. Debit Credit
Ref.
July 15 Start-up and Organization Costs 7,000
Common Stock (1,000  $5) 5,000
Additional Paid-in Capital, Common
($7,000 – $5,000) 2,000

25 Cash (2,000  $120) 240,000

Preferred Stock (2,000  $100) 200,000
Additional Paid-in Capital, Preferred
($240,000 – $200,000) 40,000
 27 Land (or Plant Site) 75,000
Common Stock (10,000  $5) 50,000
Additional Paid-in Capital, Common
($75,000 – $50,000) 25,000

Aug. 1 Cash 35,000

Common Stock (5,000  $5) 25,000
Additional Paid-in Capital, Common
($35,000 – $25,000) 10,000

PTS: 1 OBJ: LO1| LO4 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: stock issuance
46. ANS:

General Journal Page 1

Date Description Post. Debit Credit
Ref.
Apr. 15 Start-up and Organization Costs 9,000
Common Stock (1,000  $5) 5,000
Additional Paid-in Capital, Common
($9,000 – $5,000) 4,000

25 Cash (1,000  $115) 115,000

Preferred Stock (1,000  $100) 100,000
Additional Paid-in Capita , Preferred
($115,000 – $100,000) 15,000

27 Land (or Plant Site) 50,000

Common Stock (8,000  $5) 40,000
Additional Paid-in Capital, Common
($50,000 – $40,000) 10,000

May 1 Cash 90,000

Common Stock (15,000  $5) 75,000
Additional Paid-in Capital, Common
($90,000 – $75,000) 15,000

PTS: 1 OBJ: LO1| LO4 NAT: AACSB correlation: analytic

LOC: Learning type: Application KEY: stock issuance

MATCHING

47. ANS: H PTS: 1 DIF: Easy OBJ: 3.2

NAT: AACSB Reflective Thinking
48. ANS: B PTS: 1 DIF: Easy OBJ: 3.1
NAT: AACSB Reflective Thinking
49. ANS: G PTS: 1 DIF: Easy OBJ: 3.2
NAT: AACSB Reflective Thinking
50. ANS: J PTS: 1 DIF: Easy OBJ: 3.1
NAT: AACSB Reflective Thinking
51. ANS: A PTS: 1 DIF: Easy OBJ: 3.2
NAT: AACSB Reflective Thinking
 52. ANS: D PTS: 1 DIF: Easy OBJ: 3.2
NAT: AACSB Reflective Thinking
53. ANS: E PTS: 1 DIF: Easy OBJ: 3.1
NAT: AACSB Reflective Thinking
54. ANS: F PTS: 1 DIF: Easy OBJ: 3.1
NAT: AACSB Reflective Thinking
55. ANS: C PTS: 1 DIF: Easy OBJ: 3.2
NAT: AACSB Reflective Thinking
56. ANS: I PTS: 1 DIF: Easy OBJ: 3.1
NAT: AACSB Reflective Thinking

PROBLEM

57. ANS:

GENERAL JOURNAL PAGE

Post.
Date Description Ref. Debit Credit
20 Closing Entries
Dec. 31 Income from Services 24,900.00
   Income Summary 24,900.00

31 Income Summary 9,900.00

   Wages Expense 1,600.00
   Rent Expense 3,600.00
   Utilities Expense 1,100.00
   Depreciation Expense, Equipment 600.00
   Supplies Expense 2,600.00
   Miscellaneous Expense 400.00

31 Income Summary 15,000.00

   R. Barsky, Capital 15,000.00

31 R. Barsky, Capital 16,300.00

   R. Barsky, Drawing 16,300.00

PTS: 1 DIF: Medium OBJ: 5.2 NAT: AACSB Analytic

58. ANS:

GENERAL JOURNAL PAGE

Post.
Date Description Ref. Debit Credit
20 Closing Entries
Dec. 31 Income from Services 29,800.00
   Income Summary 29,800.00

31 Income Summary 10,400.00

   Wages Expense 3,700.00
   Rent Expense 2,400.00
   Insurance Expense 1,600.00
   Utilities Expense 800.00
   Depreciation Expense, Equipment 700.00
   Supplies Expense 900.00
   Miscellaneous Expense 300.00

31 Income Summary 19,400.00

   E. Hess, Capital 19,400.00
 31 E. Hess, Capital 16,800.00
   E. Hess, Drawing 16,800.00

PTS: 1 DIF: Medium OBJ: 5.2 NAT: AACSB Analytic

59. ANS:

GENERAL JOURNAL PAGE

Post.
Date Description Ref. Debit Credit
20 Closing Entries
Dec. 31 Income from Services 72,640.00
   Income Summary 72,640.00

31 Income Summary 46,560.00

   Wages Expense 35,620.00
   Rent Expense 3,600.00
   Advertising Expense 570.00
   Utilities Expense 1,140.00
   Miscellaneous Expense 490.00
   Supplies Expense 410.00
   Insurance Expense 810.00
   Depreciation Expense, Truck 3,920.00

31 Income Summary 26,080.00

   C. P. Greg, Capital 26,080.00

31 C. P. Greg, Capital 36,090.00

   C. P. Greg, Drawing 36,090.00

PTS: 1 DIF: Medium OBJ: 5.2 NAT: AACSB Analytic

60. ANS:

GENERAL JOURNAL PAGE 18

Post.
Date Description Ref. Debit Credit
20
Apr. 2 Allowance for Doubtful Accounts 1,327.00
   Accounts Receivable, S. Bang 1,327.00
       Wrote off the account as
       uncollectible.

Oct. 14 Accounts Receivable, K. Parks 765.00

   Allowance for Doubtful Accounts 765.00
       Reinstated the account.

14 Cash 765.00
   Accounts Receivable, K. Parks 765.00
       Collected account in full.

Dec. 2 Cash 181.00

Allowance for Doubtful Accounts 1,629.00
   Accounts Receivable, R. Stone 1,810.00
       Settlement in bankruptcy, 10
       percent of $1,810; wrote off the
       balance as uncollectible.
 3 Allowance for Doubtful Accounts 2,669.00
   Accounts Receivable, G. Gold 384.00
   Accounts Receivable, W. Karchner 1,370.00
   Accounts Receivable, B. Crantz 915.00
       Wrote off the accounts as
       uncollectible.

Adjusting Entry
31 Bad Debts Expense 1,432.79
   Allowance for Doubtful Accounts 1,432.79

PTS: 1 DIF: Medium OBJ: 15.1c | 15.2 | 15.3

NAT: AACSB Analytic
61. ANS:

GENERAL JOURNAL PAGE 27

Post.
Date Description Ref. Debit Credit
20
Feb. 16 Allowance for Doubtful Accounts 114 1,341.00
   Accounts Receivable, Garthe
   Company 1,341.00
       Wrote off the account as
       uncollectible.

Mar. 10 Accounts Receivable, F. Norman 352.00

   Allowance for Doubtful Accounts 114 352.00
       Reinstated the account.

10 Cash 352.00
   Accounts Receivable, F. Norman 352.00
       Collected account in full.

June 5 Accounts Receivable, L. Jacobs 800.00

   Allowance for Doubtful Accounts 114 800.00
       Reinstated the account.

5 Cash 800.00
   Accounts Receivable, L. Jacobs 800.00
       Collected account in full.

Sept. 15 Allowance for Doubtful Accounts 114 2,550.00

   Accounts Receivable, R. Singh 655.00
   Accounts Receivable, K. Martin 1,050.00
   Accounts Receivable, C. Rowe 845.00
       Wrote off the accounts as
       uncollectible.

Adjusting Entry
Dec. 31 Bad Debts Expense 3,610.00
   Allowance for Doubtful Accounts 114 3,610.00

GENERAL LEDGER
ACCOUNT Allowance for Doubtful Accounts ACCOUNT NO. 114

Post. Balance
Date Item Ref. Debit Credit Debit Credit
 20
Jan. 1 Balance 4,368.00
Feb. 16 J27 1,341.00 3,027.00
Mar. 10 J27 352.00 3,379.00
June 5 J27 800.00 4,179.00
Sept. 15 J27 2,550.00 1,629.00
Dec. 31 Adj. J27 3,610.00 5,239.00

Kantz Company
Balance Sheet
December 31, 20
Assets
Current Assets:
   Cash $ 15,643
   Accounts Receivable $86,450
          Less Allowance for Doubtful Accounts 5,239 81,211
   Merchandise Inventory 136,850
   Prepaid Insurance 1,600
   Supplies 1,350
   Total Current Assets $236,654

PTS: 1 DIF: Difficult OBJ: 15.1a | 15.2 | 15.3

NAT: AACSB Analytic

OTHER

62. ANS:

C To decrease Cash
C To increase Owner, Capital
D To decrease Accounts Payable
D To increase Salaries Expense
C To decrease Equipment
C To increase Revenue
C To decrease Accounts Receivable
D To increase Owner, Drawing
D To increase Prepaid Insurance
C To increase Accounts Payable

PTS: 1 DIF: Medium OBJ: 2.3 NAT: AACSB Reflective Thinking

TOP: Classification
63. ANS:

BS Accounts Payable
BS Accounts Receivable
IS Advertising Expense
BS Cash
BS Equipment
IS Income from Tours
N Increase in Capital
N Investment during month
BS J. Collins, Capital
N J. Collins, Drawing
BS Prepaid Insurance
IS Wages Expense
 PTS: 1 DIF: Difficult OBJ: 2.6 NAT: AACSB Reflective Thinking
TOP: Classification
64. ANS:

BS Accounts Payable
BS Accounts Receivable
BS Accumulated Depreciation, Equipment
IS Advertising Expense
BS Cash
IS Depreciation Expense, Equipment
BS Equipment
IS Income from Tours
IS Insurance Expense
BS Owner, Capital
BS Prepaid Insurance
IS Rent Expense
IS Supplies Expense
IS Utilities Expense
IS Wages Expense
BS Wages Payable

PTS: 1 DIF: Medium OBJ: 4.2 | 4.4 NAT: AACSB Reflective Thinking
TOP: Classification