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2nd Midterm Problems

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29 views5 pages

2nd Midterm Problems

Uploaded by

trithanh.vu1908
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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1.Patel Company has an inexperienced accountant.

During the first 2 weeks on the


job, the accountant made the
following errors in journalizing transactions. All entries were posted as made.
1. A payment on account of $750 to a creditor was debited to Accounts Payable $570
and credited to Cash
$570.
2. The purchase of supplies on account for $560 was debited to Equipment $56 and
credited to Accounts
Payable $56.
3. A $500 cash dividend was debited to Salaries and Wages Expense $500 and
credited to Cash $500.
Instructions
Prepare the correcting entries
2.The following characteristics, assumptions, principles, or constraint guide the IASB
when it creates
accounting standards.
A. Relevance B. Expense recognition principle
C. Faithful representation D. Time period assumption
E. Comparability F. Going concern assumption
G. Consistency H. Historical cost principle
I. Monetary unit assumption J. Full disclosure principle
K. Economic entity assumption L. Materiality
Match each item above with a description below.
1. ________ Ability to easily evaluate one company’s results relative to another’s.
2. ________ Assumption that a company will continue to operate for the foreseeable
future.
3. ________ The judgment concerning whether an item’s size is large enough to
matter to decision makers.
4. ________ The reporting of all information that would make a difference to
financial statement users.
5. ________ The practice of preparing financial statements at regular intervals.
6. ________ The quality of information that indicates the information makes a
difference in a decision.
7. ________ A belief that items should be reported on the statement of financial
position at the price that was
paid to acquire them.
8. ________ A company’s use of the same accounting principles and methods from
year to year.
9. ________ Tracing accounting events to particular companies.
10. _______ The desire to minimize bias in financial statements.
11. _______ Reporting only those things that can be measured in monetary units.
12. _______ Dictates that eff orts (expenses) be recognized in the period in which a
company generates
results (revenues)
3.Ben Cartwright Pest Control has the following balances in selected accounts on
December 31, 2020.
Accounts Receivable € 0
Accumulated Depreciation – Equipment 0
Equipment 6,650
Interest Payable 0
Notes Payable 20,000
Prepaid Insurance 3,000
Salaries and Wages Payable 0
Supplies 2,940
Unearned Service Revenue 36,000
All of the accounts have normal balances. The information below has been gathered
at December 31, 2020.
1. Depreciation on the equipment for 2020 is €1,250.
2. Ben Cartwright Pest Control borrowed €20,000 by signing a 6%, one-year note on
July 1, 2020.
3. Ben Cartwright Pest Control paid €3,000 for 12 months of insurance coverage on
October 1, 2020.
4. Ben Cartwright Pest Control pays its employees total salaries of €10,000 every
Monday for the
preceding 5-day week (Monday-Friday). On Monday, December 27, 2020, employees
were paid for the
week ending December 24, 2020. All employees worked the five days ending
December 31, 2020.
5. Ben Cartwright Pest Control performed disinfecting services for a client in
December 2020. The client
will be billed €3,000.
6. On December 1, 2020, Ben Cartwright Pest Control collected €36,000 for
disinfecting processes to be
performed from December 1, 2020, through May 31, 2021.
7. A count of supplies on December 31, 2020, indicates that supplies of €750 are on
hand.
Instructions:
Prepare the adjusting entries for each.
4. Vanguard Company had the following adjusted trial balance at December 31, 2020.
VANGUARD COMPANY
Adjusted Trial Balance
For the Year Ended December 31, 2020
Account Titles Debits Credits
Cash ₤ 12,800
Accounts Receivable 8,800
Equipment 15,900
Accounts Payable ₤ 4,100
Accumulated Depreciation-Equip. 7,400
Share Capital - Ordinary 17,000
Retained Earnings 25,500
Dividends 16,000
Service Revenue
Unearned Service Revenue
68,000
1,800
Rent Revenue 6,500
Salaries and Wages Expense 55,700
Depreciation Expense 6,000
Supplies Expense 200
Utilities Expense 14,900
₤130,300 ₤130,300
Instructions
Journalize the entries required to close the accounts
5. The following items were taken from the financial statements of J. Kung
Enterprises. (All amounts are in
thousands.)
Long-term debt HK$ 1,000 Accumulated depreciation—equipment HK$ 5,655
Prepaid insurance 650 Accounts payable 1,214
Equipment 11,500 Notes payable (due after 2021) 400
Share investments (long-term) 264 Share capital—ordinary 11,455
Debt investments (short-term) 3,690 Retained earnings 1,500
Notes payable (due in 2021) 500 Accounts receivable 1,696
Cash 2,668 Inventory 1,256
Instructions
Prepare a classified statement of financial position in good form as of December 31,
2020

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