Principles of Accounting Test 1

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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.

 

 DRCR
a.  
   
   
b.  
   
   
c.  
   
   
d.  
   
e.  
   
f.  
   
g  
   

 

 

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

AccountDR.CR.
Cash6,100 
Accounts receivable17,100 
Prepaid Rent12,400 
Office Supplies Inventory1,600 
Equipment20,000 
Accumulated Depreciation-Equipment  
Accounts Payable 4,700
Salaries Payable 1,600
Unearned Revenue  
Common Stock 38,000
Retained Earnings 25,600
Dividends8,000 
Service Revenue 25,000
Salaries Expense20,000 
Rent Expense8000 
Depreciation Expense  
Advertising Expense1,700 
Supplies Expense  
Total94,900 

 

 

 

 DR.CR
a.  
   
   
   
b.  
   
c.  
   
d.  
   
e.  
   
f.  
   

 

 

 

 

Isaiah’s Automotive Service

Adjusted Trail Balance

December 31, 2018

AccountDR.CR.
Cash  
Accounts receivable  
Prepaid Rent  
Office Supplies Inventory  
Equipment  
Accumulated Depreciation-Equipment  
Accounts Payable  
Salaries Payable  
Unearned Revenue  
Common Stock  
Retained Earnings  
Dividends  
Service Revenue  
Salaries Expense  
Rent Expense  
Depreciation Expense  
Advertising Expense  
Supplies Expense  
Total  

 

 

 

 

 

 

 

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