FINAL EXAM KEY AND MARKING SCHEME

FINANCIAL ACCOUNTING

Question 1. (30 points)

1.1. Each correct journal is worth 3 points

Insurance expense 500

Prepaid Insurance 500

Supplies expense 3200

Supplies 3200

Depreciation expense 3700

Accumulated
depreciation 3700

Salary expense 1000

Salary payable 1000

COGS 500
Merchandise Inventory 500

1.2. Prepare a multiple-step income statement for fiscal year 2017: (15 points)
Sales  
321,000
Less : Sales discount  
4,300
Sales returns and allowances
2,000 6,300
Net sales  
314,700
Cost of goods sold  
230,650
Gross profit  
84,050
Expenses
Selling expenses  

Depreciation expense, Store equipment

3,700
Sales salaries expense
22,000
Rent expense – Selling space
4,500
Store supplies expenses
3,200
Advertising expenses
1
 11,300
Total selling expenses
44,700

General and administrative expenses  

Insurance expense
500
Office salaries expense
22,000
Rent expense – Office space
4,500
Total general and administrative expenses  
27,000

Total expenses  
71,700
Net income  
12,350

Question 2:

2.1 + 2.3. Each correct journal is worth 3 points

2.1 Journal 2.3. Adjusting entry

4-Jan Merchandise Inventory 4800 Supplies expense 360
Account payable 4800 Supplies 360
7-Jan Merchandise Inventory 4500
Account payable 4500 Insurance expense 555
17-Jan Account payable 4500 Prepaid insurance 555
Merchandise Inventory 90
Cash 4410 Rent expense 1650
20-Jan Account payable 4800 Prepaid rent 1650
Cash 4800
23-Jan Account receivable 7200 Depreciation expense 375
Sales 7200 Acc. Dep 375
COGS 5682
Inventory 5682 Salary expense 500
24-Jan Sales returns 300 Salary payables 500
Account receivable 300
Inventory 220.5
COGS 220.5
1-Feb Prepaid rent 2475
Cash 2475
2-Feb Cash 6810
Sales discount 90
Account receivable 6900
1-Mar Machine 10000
2
 Cash 10000
8-Mar Land 20000
10-Mar Equipment 8000
Building 12000
Cash 40000
Trial Balances (Questions 2.2 + 2.4)

Each ledger balance in 2.2 is worth 3 points. Each ledger balance in 2.4 is worth 2 points.

Unadjusted Adjusted
Adjustments
Trial Balance Trial Balance

  Dr. Cr. Dr. Cr. Dr. Cr.

Cash 3,625 3,625

Inventories 3,749 3,749

Prepaid insurance 1,665 555 1,110

Computer supplies 560 360 200

Accumulated

depreciation 1,250 375 1,625