THE NATIONAL ECONOMICS UNIVERSITY THE IHME PROGRAM- INTAKE 62 COURSE: ACCOUNTING PRINCIPLES MID-

TERM EXAMINATION N0.1

STUDENT NAME: Lê Nhật Linh ID:11202143

Question 1: (3 points) Badboy Company prepares monthly financial statements. Below are listed some selected
accounts and their balances in the September 30 trial balance before any adjustments have been made for the month
of September.

BADBOY COMPANY

Trial Balance (Selected Accounts)

September 30, 2016

Debit Credit

Supplies $3200

Prepaid Insurance ............................................................................4,200

Equipment .......................................................................................16200

Accumulated Depreciation—Equipment ................................................. $1,275

Unearned Rent Revenue .......................................................................... 1200

Supplies expense 1800

Insurance expense 150

Depreciation expense 1275

Rent revenue 500

(Note: Debit column does not equal credit column because this is a partial listing of selected account balances)

An analysis of the account balances by the company’s accountant provided the following additional information:

1. A physical count of supplies revealed $1,400 on hand on September 30.

2. A two-year life insurance policy was purchased on June 1 for $3,600.

3. Equipment depreciated $3,300 per year.

4. The amount of rent received in advance that remains unearned at September 30 is $700.

Instructions: Using the above additional information, prepare the adjusting entries that should be made by Badboy
Company on September 30.

Question 2 (5 points): The adjusted trial balance for Bella's Beauty Salon

Requirements:
 1. Refer to the figure above. Prepare an income statement for the adjusted trial balance of Bella’s beauty salon.

Bella’s beauty salon

Income statement

December 31

Revenue

Rent earned $3400

Fees earned 23400

Total revenue $26800

Expenses

Wages expense 3400

Utilities expense 690

Property taxes expense 1050

Insurance expense 1240

Shop supplies expense 780

Depreciation expense-shop equipment 350

Depreciation expense-building 2220

Interest expense 4950

Total expenses 14680

Net income 12120

2. Prepare a balance sheet from the adjusted trial balance of Bella’s beauty salon.

Bella Beauty Salon

Balance sheet

December 31

Asset

Cash $4200

Rent receivable 200

Prepaid insurance 240

Shop supply 210

Shop equipment 3860

Less: Accumulated depreciation-shop equipment 1120 2740

Building 57500

Less: Accumulated depreciation-buiding 6060 51440

Land 55000

Total asset: 114030

Liabilities and Owner’s equity

Liabilities

Wages payable 200

Property taxes payable 450

Interest payable 600

Unearned rent 800

Long-term notes payable 50000

Total liabilities: 52050

Owner’s equity

Bella Hanson, capital 61980

Total liabilities and owner’s equity: 114030

Question 3 (2 points): What is a trial balance? What is its purpose?

A trial balance is a list of accounts and their balances at a given time. Customarily, companies prepare a trial balance at
the end of an accounting period. They list accounts in the order in which they appear in the ledger. Debit balances
appear in the left column and credit balances in the right column.

The purpose: The trial balance proves the mathematical equality of debits and credits after posting. Under the double-
entry system, this equality occurs when the sum of the debit account balances equals the sum of the credit account
balances. A trial balance may also uncover errors in journalizing and posting.