Mock Test (final exam)

Time: 60 minutes
1. Classify each item as cash inflow or cash outflow from operating activity,
investing activity, financing activity, or noncash activity:
a. Purchase inventory for $2,000 cash
b. Direct issuance of common stock to purchase equipment cost $20,000
c. Pay salaries for employee for $4,000 cash
d. Conversion of bonds into common stock.
e. Issuance of share capital for $10,000 cash
f. Issuance of note payable to purchase inventory cost $10,000
g. Declare and pay cash dividends of $8000
h. Pay interest on note payable for $2000 cash
i. Exchanges a building cost $50,000 which has accumulated depreciation of
$35,000 for a new vehicle cost $15,000.
j. Receive dividends from invesment in other companies’ stock for $1000 cash
k. Receive interest from bank saving account for $100 cash
l. Purchase property for $30,000 cash
m. Pay income tax $6000 cash to the governement
2. Barge Co. distributes suitcases to retail stores. At the end of June, Barge’s balance
sheet shows Inventory $2,200, Cash 3,000, Equipment 1,000, Common Stock 3,000, and
Retained Earnings 3,200. During the month of July, the following merchandising transactions
occurred.
Jul 1. Purchased suitcases on account for $1,800 from Hostad Manufacturers, FOB
destination, terms 2/10, n/30. The appropriate party also made a cash payment of $100 for
freight on this date.
Jul 2. Sold suitcases on account to Kaye Satchels for $2,000, term 2/10, n/30. The cost of
suitcases sold is $1,200.
Jul 4. Paid Hostad Manufacturers in full.
Jul 6. Received payment in full from Kaye Satchels.
Jul 10. Sold suitcases on account to The Going Concern for $1,800. The cost of the suitcases
sold was $1,080.
Jul 15. Purchased suitcases on account for $1,900 from Nelson Manufacturers, FOB shipping
point, terms 1/10, n/30. The appropriate party also made a cash payment of $125 for freight
on this date.
Jul 18. Received $300 credit for suitcases returned to Nelson Manufacturers.
Jul 20. Received payment in full from The Going Concern.
Jul 21. Sold suitcases on account to Wopat’s for $2,250. The cost of suitcases sold was
$1,350.
Jul 22. Paid Nelson Manufacturers in full.
Jul 28. Granted Wopat’s $200 credit for suitcases returned costing $120.
Jul 31. Salaries and wages expense paid by cash is $1,800
Jul 31. Depreciation expense of the month is $200
Instructions
(a) Journalize the transactions using a perpetual inventory system.
(b) Journalize entries to close the book for July.
(c) Prepare multiple-step income statement for July.
(d) Prepare classified balance sheet on July 31.