MINISTRY OF EDUCATION AND TRAINING FINAL EXAM ECON IVERSI MSMR ESN ONGS UEnIrY INTRODUCTORY ACCOUNTING 1 Mode of study: Full time, Intake: 62 Exam place: Building 1&2— Class: AIBM School of Advanced Education Programs Exam date: 13/12/2021 Exam time: Allowed time: 90 minutes Opened Book Exar Problem I - Adjusting Entries (15 points) The following information for Kance Company is available on July 31, 2020, the end of a monthly accounting period, 1. Kance Company purchased a 2-year insurance policy on April 1, 2020, and debited Prepaid Insurance for $5,600. 2. On June 1, 2020, a tenant in an apartment building owned by Kance Company paid $6,800, which represents six months’ rent in advance. The amount received was credited to the Uneamed Rent account. 3. On July 1, 2020, the balance in the Office Supplies account was $300. During July, office supplies costing $650 were purchased. A physical count of office supplies at July 31 revealed that there was $280 still on hand. 4. On March 31, 2020, Kance Company purchased a delivery van for $80,000. It is estimated that the annual depreciation will be $9,000. Instructions: For each situation given indicate for Kance Company for the month of July (ithe type of adjustment (prepaid expense, unearned revenue, accrued revenue, acerued expense); (2) the status of the accounts before adjustment (overstated or understated); (3) Prepare the necessary adjusting journal entries. Problem II - Journal Entries (15 points) Pine Distributing Company. During the month of December the company completed the following summary transactions Dec. 6, Paid $1,800 for salaries due employees, of which $800 is for December and $1,000 is for November salaries payable. 10. Sold merchandise for cash $6,500. The cost of the merchandise sold was $4,500. 13. Purchased merchandise on account from Hecht Co. $9,500, terms 2/10, 1/30. 18 Sold merchandise on account $15,000, terms 3/10, 1/30. The cost of the merchandise sold was $9,000. 23 Paid Hecht Co. in full, less discount, 27 Received collections in full, less discounts, from customers billed on December 18. Instructions: Jouralize the transactions for the month of December for Pine Company, using perpetual inventory system, beProblem III - Multiple-Step Income Statement (10 points) People’s Choice Wholesale Company At the end of the company’s fiscal year on November 30, 2020, these accounts appeared in balance: Common Stock 45,000) (Cost of Goods Sold 634,300 Freight-Out 8,200 Equipment 157,000] Depreciation Expense 15,500} Dividends 16,000} Gain on Disposal of Plant Assets 3,000) [income Tax Expense 10,000} Insurance Expense 8,000 Taterest Expense 3,000 Tnventory 26,200 [Notes Payable %3,500| Prepaid Insurance 6,000 [Advertising Expense $35,500 Rent Expense 32,000 [Retained Earnings 16,200 Salaries and Wages Expense 118,000 Salaries and Wages Payable 6,000 ‘Sales Returns and Allowances 30,000 985,000) 12,600 1. Prepare a multiple-step income statement 2, Calculate the profit margin and the gross profit rate. Problem IV - Periodic Inventories (15 points) Bobie Inc. is a retailer operating in Calgary, Alberta. Bobie uses the periodic inventory method. Assume all amounts are settled in cash. You are provided with the following information for Bobie for the month of January 2020. Date —_ Description Quantity Unit Cost or Selling Price 160 $20 100 2 180 45 5 24 50 50 Jan.23 Purchase 100 25 Jan.30 Sale 130 38 Instructions For each of the following cost flow assumptions, calculate (i) cost of goods sold; (ii) ending inventory, and (iti) gross profit. (1) LIFO. (2) FIFO. (3), Moving-average: (Round. cost per unit to three decimal places.)Problem V - Receivable (10 points) = At the beginning of the current period, Rose Corp. $500,009; in Allowance for Doubtful Accounts of $35,000 (credit). - During the period, it had net credit sales of $1,900,000 and collections of $1,868,000. It wrote off as uncollectible accounts receivable of $22,500. However, a $18,500 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accountsare estimated to total $38,000 at the end of the period. Instructions (Omit cost of goods sold entries.) (@) Prepare the entries to record sales and collections during the period. (©) Prepare the entry to record the write-off of uncollectible accounts during the period. (9 Prepare the entries to record the recovery of the uncollectible account during the period. (a) Prepare the entry to record bad debt expense for the period. (©) What is the net realizable value of the receivables at the end of the period? had balances in Accounts Receivable of Problem VI - Plant Asset Disposal Entries (15 points) Prepare the necessary joumal entries to record the following selected cash transactions occurred in 2020 for Android Co Apr. 1 Purchased land for $2,500,000. May 1 Sold equipment that cost $800,000 when purchased on January 1, 2013; The equipment was sold for $190,000. Sept. 30 Sold land for $1,800,000. The land cost $1,100,000. July 1 Purchased equipment for $1,200,000. Dec. 31 Retired equipment that cost $900,000 when purchased on December 31,2010. No salvage value was received. Note: Android Co ~ Uses straight-line depreciation for buildings and equipment. = The buildings are estimated to have a 40-year useful life and no salvage value; = The equipment is estimated to have a 10-year useful life and no salvage value. ~ Update depreciation on assets disposed of at the time of sale or retirement. Problem VII - Liabilities (10 points) Journalize the January selected transactions occurred. (Omit cost of goods sold entries.) Jan. 1 Borrowed $26,000 in cash from ANZ Bank on a 3-month, 8%, $26,000 note. 5. Sold merchandise for cash totaling $6,996, which includes 6% sales taxes. 20 Sold 500 units of a new product on credit at $58 per unit, plus 6% sales tax. 31 Adjusting entries for the note payable Problem VIII - Stochoders Equity ( 10 points) NEU Co. had these transactions during the current period, May 10 Issued 80,000 shares of $1 par value common stock for cash of $300,000. June 15. Issued 3,000 shares of $100 par value preferred stock for cash at $106 pershare. Oct. 25 Purchased 2,000 shares of treasury stock for $9,000. a Prepare the journal entries for the NEU Co. transactions END.