Part- one

Multiple choices
1. If the term of agreement between the buyer & seller is FOB shipping point
A. The seller is responsible to cover all the fright in
B. The seller accumulate in a separate account called fright in
C. Owner ship passes to the buyer at the shipping point
D. Owner ship passes to the buyer when the buyer receives merchandise
2. for an enterprise using the periodic inventory system, which of the following added to merchandise
inventory at the beginning of the period in computing the cost of merchandise sold
A. purchase discount
B. merchandise inventory at the end of the period
C. purchase return and allowance
D. none of the above
3. if merchandise purchased on account is returned, the buyer may inform the seller of details by issuing
A. a bill
B. an invoice
C. a debit memorandum
D. a credit memorandum
4. If the term of agreement between the buyer & seller is FOB shipping point
E. The seller is responsible to cover all the fright in
F. The seller accumulate in a separate account called fright in
G. Owner ship passes to the buyer at the shipping point
H. Owner ship passes to the buyer when the buyer receives merchandise
5. for an enterprise using the periodic inventory system, which of the following added to merchandise
inventory at the beginning of the period in computing the cost of merchandise sold
E. purchase discount
F. merchandise inventory at the end of the period
G. purchase return and allowance
H. none of the above
6. if merchandise purchased on account is returned, the buyer may inform the seller of details by issuing
E. a bill
F. an invoice
G. a debit memorandum
H. a credit memorandum

7. Reese Company purchased office supplies costing $4,000 and debited Prepaid Office
Supplies for the full amount. At the end of the accounting period, a physical count of office
supplies revealed $1,600 still on hand. If Reese started the accounting period with $1,800 of
Prepaid Office Supplies, then Office Supplies Expense for the accounting period is
a. $1,600.
b. $2,400.
c. $1,800.
d. $4,200.

1
 Part two
Work out problems

1. Three items are omitted in each of the following tabulations of income statement data. Determine the
amounts of the missing item. (5 marks)

Sales ------------------------------ $ (a) -------------$575,000----------$985,000-------------$755,000

Sales ret & allow---------------$12,000----------$17,000------------$(g) -------------------$28,000
Sales discount------------------$2,000------------$8,000--------------$5,000----------------$(j)
Net sales--------------------------$110,000--------$(d) -----------------$965,000-------------$(k)
Beginning inventory----------$(b) --------------$125,000-----------$215,000--------------$(l)
Cost of mds purchase-------$ 70,000---------$(e) -----------------$600,000--------------$580,000
Ending inventory--------------$30,000----------$105,000------------$(h) --------------------$120,000
Cost of mds sold--------------$65,000----------$340,000------------$(i) ----------------------$540,000
Gross profit----------------------$(c) --------------$(f) -------------------$390,000---------------$180,000

2. The following selected transactions were completed during May between Lucy Company and Dave Inc.
May 1. Lucy company sold merchandise on account to Dave Inc $20,000 terms FOB destination

2. Lucy company paid transportation cost of $300 for delivery of merchandise

sold to Dave Inc. on May 1.
7. Lucy company sold merchandise on account to Dave Inc. $15,000 terms
FOB shipping point, n/30.
10. Dave Inc returned merchandise purchased on account on May 7 from Lucy
Company $4,000
10. Dave Inc paid transportation charges of $500 on May 7 purchases from
Lucy Company.
12. Lucy company sold merchandise on account to Dave inc $16,000 term
FOB shipping point, 2/10,n/30. Lucy Company prepaid transportation costs of
$2,000 which were added to the invoice.
16. Dave Inc paid Lucy Company on account for purchase of May 1 less
discount.
18. Dave Inc paid Lucy Company on account for purchase of May 12 less
discount
21.Dave Inc paid Lucy Company on account for purchase of May 7 less return
of May 10.

2
3. . Lido co. maintains checking account system at the Bank of Abyssinia. Selected data from the
July 31 ledger balance and bank statement is as follows

 Cash balance as per the bank statement is, 13,632

 Analysis of the bank data reveals the following:
 Deposit in transit ……….. 1,752
 NSF checks from the Zecko Co. 175
 Notes collected by the bank 500 plus interest revenue of 15
 Outstanding check …….2400
 A check for 352 to a creditor on account that cleared the bank on July was Journalized
and posted for 325
Required:
a. Determine the balance of cash as per the book of Lido Company
B.Determine the balance of cash to be reported in the July 31 balance sheet

4.On the basis of the following data, journalize:

a) The adjusting entries at May 30,1999
b) The reversing entries on June 30,1991(8 marks)
1) The prepaid insurance account before adjustment $6,000 on May 30. The balance indicated that
$2,200 of premium has expired during the year.
2) Store supplies account balance before adjustment $8,200. Store equipment physical inventory May
30,$2,800
3) Unearned rent account balance before adjustment $4,000, unearned rent income May 30, $3,200
4) Sales salary expense has a balance of $20,000. The balance shows that accrual of sales salary is $5,000.