Principles of Accounting Test 1

January 1, 2017           January 1, 2018

Total Assets                            $427,000                     $452,000

Total Liabilities                       57,000             67,500

Retained Earnings                               ?                                  ?

Common. Stock                      115,000                       115,000

Dividends                                                                   (35,000)

Revenues                                                                     311,000

Expenses                                                                                 ?

What is the amount in Retained Earnings on January 1, 2017? (5 points)

What is the amount in Retained Earnings on January 1, 2018? (5 points)

What is the amount of Expenses during the year? (5 points)

Did the company report Net Income or Net Loss? Amount? (5 points)

Use the accounting equation to solve for unknown amounts. Show all your work.

Make the journal entries for the following: (20 points)

1. Richard started a business and contributed $10,000 and a building valued at $50,000 in exchange for common stock.
2. Earned $12,000 for service revenue. $6000 was received and the rest has not been paid.
3. Purchased equipment for $6,000, $1000 down payment and the rest on account.
4. Paid $600 for office supplies.
5. Employees earned $1600 in wages each week. They are usually paid on Monday. But the week is from Friday to Thursday(the business is only open 5 days a week (M-F) and wages are the same each day). The year ends on Thursday. Be careful: when was the last time they were paid and how much in wages have they earned since then? You are making the journal entry to accrue all the wages since the last time they were paid.
6. Cash dividends of $700 were paid to stockholders.
7. Received a bill for $250 for the monthly utilities. The bill has not yet been paid.

Isaiah’s Automotive Services: Adjustment data at 12/31:

1. On December 9, Isaiah’s Automotive Services was contracted to preform services for a client, receiving $10,000 in advance. The services are maintenance contract on a fleet. Record this. By 12/31, Isaiah had performed$2,000 on the maintenance contract. Record this Adjustment.
2. Isaiah prepaid six months of rent on November 1 (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the 6 months of rent prepaid on November 1).Make the adjusting entry.
3. Isaiah purchased $600 in supplies on Dec. 10.
4. Depreciation for the equipment was recorded. Assume the equipment has a residual value of $1,000 and Isaiah plans on using it 5 years. They have owned it 6 months of this year. Use straight-line.
5. Isaiah received a bill for online advertising, $550. The Company will not pay for it until January.
6. On 12/31, Isaiah had $800 in supplies. Don’t forget the purchases in part c.

1. Journalize the transactions and adjusting entries.
2. Prepare the Adjusted Trial Balance.

Isaiah’s Automotive Services

Unadjusted Trail Balance

December 31, 2018

Isaiah’s Automotive Service

Adjusted Trail Balance

December 31, 2018

Multiple Choice (20 points)_______________________________________________________

Accounting Equation (20 points)___________________________________________________

Journal Entries (20 points)________________________________________________________

Adjusting Journal Entries (20 points)________________________________________________

Adjusted Trial Balance (20 points)_______________________________________________

Total_________________________________________________________________________

Last Updated on January 28, 2020