Financial Accounting Exam - 2020/2021 PDF

FINANCIAL ACCOUNTING A.Y. 2020/2021 FINAL EXAM NAME_________________ SURNAME_________________ STUDENT ID NO. ________________ TIME ALLOWED 60 MINUTES A (7) The Balance Sheet of Christmas Ltd, follows: Table...

FINANCIAL ACCOUNTING A.Y. 2020/2021 FINAL EXAM NAME_________________ SURNAME_________________ STUDENT ID NO. ________________ TIME ALLOWED 60 MINUTES A (7) The Balance Sheet of Christmas Ltd, follows: Table 1 – Christmas’s Balance Sheet Christmas Ltd. Balance Sheet as of December 31, 2020 Assets Liabilities and Shareholders' Equity Cash 286,000 Liabilities Accounts Receivable 188,200 Accounts Payable 134,000 Office Supplies 80,200 Salary Payable 44,000 Fixture 75,000 Allowance for Doubtful Accounts 30,000 (Accumulated Depreciation – Fixture) (29,700) Unearned Sales Revenue 124,500 Machinery 172,000 Notes Payable 225,000 (Accumulated Depreciation – Machinery) (95,000) Shareholders' Equity Share capital 107,000 Retained Earnings 12,200 Total Shareholders' Equity 119,200 Total 676,700 Total 676,700 Christmas Ltd experienced the following transactions during the year ended December 31, 2020: 1. The company declared dividends, € 6,000. 2. On December 22, 2020 Christmas paid a supplier € 20,000. The supplier will deliver finished goods on January 23, 2021. 3. The company collected cash on account, € 10,000. 4. On June 6, 2020 the owner of the company bought a country house, € 140,000, immediately paying € 50,000. Requirements: ‐ Journalize each relevant transaction (weight 4). ‐ Show the ending balance of Receivables and Cash (weight 3). B (15) Noel Inc. is a wholesale company, whose 2020 assets and liabilities are summarized as follows: Table 2 – Noel Inc.’s Assets and Liabilities Debit Credit Notes Receivable 110,000 Notes Payable (short‐term) 98,500 Accounts Receivable 60,850 Payables 116,400 Cash 55,000 Allowance for doubtful accounts 30,500 Inventories 32,400 Notes payable (long‐term) 236,000 Plant 322,600 Interest payable 12,400 (Accumulated Depr. Plant) (55,000) Allowance for doubtful accounts 3,000 Buildings 402,250 Shareholders' capital 119,800 (Accumulated Depr. Buildings) (282,500) Retained earnings 38,000 Trading securities 9,000 TOTAL 654,600 TOTAL 654,600 At December 31, 2020 Noel Inc. still has to record several journal entries, described here below. During the reporting period, the company: 1. On January 1, 2020 bought three used pieces of machinery in a € 300,000 lump‐sum purchase, € 15,000 cash and the remaining on account. An independent appraiser valued the fair value of the plants as shown in Table 3. Table 3 – Annual units of production Plant no. Appraisal Value Depreciation method 1 50,000 Straight line; useful life 5 years; residual value 5,000 2 120,000 Straight line; useful life 10 years Double‐declining balance; useful life 5 years; residual 3 180,000 value € 5,000 On May 1, 2020 Noel Inc. signed a note on account. 2. On September 1, 2020 the company purchased € 200,000 of 3% bonds issued by Epiphany Ltd, quote 98, on account. The bonds pay interests on September 1 and March 1 each year. Maturity date September 1, 2025. 3. On November 1, 2020 Noel Inc. purchased 400 Eve Ltd. shares at € 25 per share cash. On December 5, sold 100 Eve’s shares for the market price of € 27 per share, immediately collecting cash. At year‐end the company adjusted the investment account to fair market value of € 23 per share. 4. Before 2020 year‐end adjustments, Noel Inc. has prepared the following aging schedule for Accounts Receivable. 1‐30 31‐60 61‐90 Over 90 Total Balance Days Days Days Days 60,850 15,600 20,050 13,200 12,000 Estimated Uncollectible 1% 3% 5% 20% Requirements: ‐ Journalize all entries related to the company’s 2020 transactions, also making the related adjustment entries (8) ‐ Show the ending balance of the following t‐accounts: Allowance for Doubtful Accounts, Trading Securities, Accumulated Depreciation and Machinery (4). ‐ Show how Noel Inc. would report Receivables, Bonds and Buildings on the Balance Sheet (3). C (5) 1. Which of the following should be included in the Machinery account? A) The cost of transporting the machinery to its setup location. B) The cost of a maintenance insurance plan after the machinery is up and running. C) The cost of calibrating the machinery after it has been used for a year. D) The cost of insurance while the machinery is being overhauled. 2. A PPE is acquired by a business on January 1, 20X6, for $30,000. The asset’s estimated residual value is $8,000 and its estimated life is 5 years. Management chooses to use straight‐line depreciation. On January 1, 20X8, management revises the total useful life to 6 years and the residual value to be zero. Compute the balance in Accumulated Depreciation on December 31, 20X8. A) $4,400 B) $5,300 C) $8,800 D) $14,100 3. A negative translation adjustment is: A) like a loss. B) reported as a contra item in the shareholders’ equity section of the balance sheet. C) part of other comprehensive income. D) all of the above. 4. A bond with a stated interest rate of 6% and a market rate of 8% was issued at a price reflecting the market interest rate. As the bond matures: A) the Premium on Bonds Payable decreases. B) the Discount on Bonds Payable decreases. C) the Premium on Bonds Payable increases. D) the Discount on Bonds Payable increases. 5. The journal entry to record the receipt of a cash dividend arising from an available‐for‐sale investment held by a company includes: A) a debit to Unrealized Gain on Investment and a credit to Dividend Revenue. B) a debit to Cash and a credit to Dividend Revenue. C) a debit to Cash and a credit to Unrealized Gain on Investments. D) no journal entry. Only a memorandum entry is required. 6. Associated Services Company paid twelve months’ insurance in advance totaling $9,000. At the end of the first month, the adjusting entry would include a: A) debit to Prepaid Insurance for $8,250. B) debit to Prepaid Insurance for $750. C) debit to Insurance Expense for $8,250. D) debit to Insurance Expense for $750. 7. High Times Corporation owns 300 shares of Low Tide Company’s ordinary shares. Low Tide has 1,000,000 ordinary shares outstanding. High Times Corporation will show the investment on their books as: A) a liability. B) an equity.  C) an asset. D) none of the above. No entry is required since the actual liability amount is not known. 8. Company A has a Note Receivable of $5,000. The note will be collected in installments. $1,000 is due within a year and the remainder is due after a year. The classification of the note on the balance sheet is: A) all $5,000 is a current asset. B) all $5,000 is a long term asset. C) $1,000 is a current asset and $4,000 is a long term asset. D) $4,000 is a current asset and $1,000 is a long term asset. 9. A company purchased merchandise inventory on credit for $600 per unit, and later sold the inventory for $800 per unit. The journal entry to record the purchase of inventory included a debit to: A) Accounts Receivable. B) Inventory. C) Accounts Payable. D) Cost of Goods Sold. 10.The trial balance is used to determine whether: A) total assets equal total liabilities. B) total debits equal total credits. C) total revenues plus gains equal total expenses plus losses. D) total increases in accounts equal total decreases in accounts D (4) Notes to the accounts presented in Pirelli’s annual report show the following monetary amounts related to Inventories. ‐ Did the company record any increase in WIP? ____________________________________________________________________________________ ________________________________________________________________________ ‐ Did the company paid suppliers in advance? ____________________________________________________________________________________ ________________________________________________________________________  FINANCIAL ACCOUNTING A.Y. 2020/2021 FINAL EXAM – JUNE 24, 2021 NAME_________________ SURNAME_________________ STUDENT ID NO. ________________ TIME ALLOWED 75 MINUTES A (7) The Balance Sheet of Teddy Bear Ltd, follows: Table 1 – Teddy Bear’s Balance Sheet Teddy Bear Ltd. Balance Sheet as of December 31, 2020 Assets Liabilities and Shareholders' Equity Cash 27,000 Liabilities Accounts Receivable 135,500 Accounts Payable 105,000 Inventory 69,000 Salary Payable 12,300 Equipment 98,000 Allowance for Doubtful Accounts 5,000 (Accumulated Depreciation – Fixture) ‐39,200 Unearned Sales Revenue 28,300 Machinery 134,000 Notes Payable 81,500 (Accumulated Depreciation – Machinery) ‐67,000 Shareholders' Equity Share capital 105,000 Retained Earnings 20,200 Total Shareholders' Equity 125,200 Total 357,300 Total 357,300 Teddy Bear Ltd experienced the following transactions during the year ended December 31, 2020: 1. On April 5, 2020 provided services to a customer, € 120,000, immediately collecting € 85,000. On September 3, 2020 received a note receivable on account. 2. Accrued salary expense for December 2020, € 25,000, that the company will pay on January 11, 2021. 3. Declared dividends, € 5,000. 4. Returned € 20,000 worth of inventory. Requirements: ‐ Journalize each transaction (weight 4). ‐ Show the ending balance of Inventory and compute the ending balance of Shareholders’ Equity (weight 3). B (15) Rainbow Inc. is a wholesale company, whose 2020 assets and liabilities are summarized as follows: Table 2 – Rainbow Inc.’s Assets and Liabilities Debit Credit Notes Receivable 65,000 Notes Payable (short‐term) 35,600 Receivables 89,000 Payables 78,000 Cash 12,500 Allowance for doubtful accounts 12,300 Inventories 19,200 Notes payable (long‐term) 226,000 Furniture 153,000 Interest payable 15,600 (Accumulated Depr.Furniture) ‐45,900 Unearned revenue 21,000 Building 320,000 Shareholders' capital 130,000 (Accumulated Depr. Buildings) ‐60,800 Retained earnings 45,500 Trading securities 12,000 TOTAL 564,000 TOTAL 564,000 At December 31, 2020 Rainbow Inc. still has to record several journal entries, described here below. During the reporting period, the company: 1. On February 3, 2020 the company purchased land € 125,000 and signed a note payable. Rainbow also had to immediately pay title insurance costing € 4,500 and € 12,000 to remove an unwanted building. Furthermore, the company paid € 22,000 to build a fence around the property and € 3,000 for lighting the ground. On December Rainbow sold for € 220,000 the building purchased in 2018 (useful life 20 years; depreciation for 2020 not recorded yet; double declining balance method; estimated residual value € 10,000). Land improvements are depreciated using the straight line method, useful life 20 years, residual value € 5,000. 2. On October 15, 2020 sold goods to a customer (12 units, unit sale price € 3,000), immediately collecting € 11,000. The company determines inventories under the weighted average cost method. Inventory data during the reporting period are summarized in Table 3. Table 3 – Inventory data Date Transaction Units Unit cost Jan 1 Beginning Inventories 16 1,200 May 15 Purchase 9 1,300 Sep 10 Purchase 20 1,350 Oct 22 Sale 12 At the end of the reporting period the ending inventory net realizable value per unit amounts to € 1,500. 3. On November 1, 2019 signed a € 54,000 note payable that required annual payments of € 4,200 plus 4% interest on the unpaid balance each November 1 (starting from 2020). Referring to the reporting period (2020) the company has not made the related journal entries and the year‐end adjustments. 4. On October 1, 2020 the company purchased € 200,000 of 3% bonds issued by Orange Ltd, quote 98, on account. The bonds pay interests on October 1 and April 1 each year. Maturity date October 1, 2024. Requirements: ‐ Journalize all entries related to the company’s 2020 transactions, also making the related adjustment entries (8) ‐ Show the ending balance of the following t‐accounts: Inventories, Land, Notes Payable and Bonds (4) ‐ Show how Rainbow Inc. would report Receivables, Bonds and Interest Revenue on the Balance Sheet and the Income Statement (3).  FINANCIAL ACCOUNTING A.Y. 2022/2023 MID-TERM EXAM – MARCH 20, 2023 - A NAME_________________ SURNAME_________________ STUDENT ID NO. ________________ TIME ALLOWED 90 MINUTES A. Recording transactions (weight: 6) The Balance Sheet of Spring Ltd. as of December 31, 2021, follows: Table 1 – Moon Balance Sheet Moon Ltd. Balance Sheet as of December 31, 2021 Liabilities and Shareholders' Assets Equity Cash 203,600 Liabilities Accounts Receivable 190,100 Accounts Payable 186,000 Prepaid Rent 96,000 Salary Payable 44,500 Furniture 59,200 Interest payable 46,000 (Accumulated Depreciation – -29,700 Unearned Service Revenue 123,500 Furniture) Supplies 194,000 Notes Payable 193,000 Shareholders' Equity Share capital 105,000 Retained Earnings 15,200 Total Shareholders' Equity 123,200 Total 713,200 Total 713,200 Spring Ltd experienced the following transactions during the year ended December 31, 2022: 1. Sold finished goods, € 75,000 on account. 2. Lent € 28,000 to a subsidiary company, receiving a note receivable. 3. On May 15, 2022 purchased a building, € 105,000, paying € 38,000 cash and the remainder on account. On August, 28 2022 paid € 30,000 on account. 4. The company’s owner, Mr. White, sold his holiday home for € 314,000. 5. On November 12, 2022 paid rent in advance, € 18,000. 6. Collected cash on account, € 55,000. Requirements: Journalize each transaction and record it in the T-accounts (weight: 6).  B. Year-end adjusting entries (weight: 15) Moon Ltd.’s accountants must prepare the company 2022 financial statements. Starting from the 2021 Balance Sheet and considering Section A T-accounts, the following adjustments are needed. 1. Accrued interest revenue, € 2,300. 2. Supplies on hand at the end of the reporting period, € 35,000. 3. Prepaid Rent unadjusted ending balance relates to the period October 1, 2022 - September 30, 2023. 4. Depreciation of building and furniture for the year (estimated useful lives of 20 and 10 years, respectively). 5. Accrued salary expense, five-days payroll of € 6,000. December 31, 2022 falls on Thursday. 6. Earned service revenue collected in advance, € 118,000. Requirements: - Journalize adjusting entries and post them to T-accounts (weight: 6) - Show the adjusted ending balance of Prepaid Rent and Retained Earnings (weight: 2) - Journalize closing entries (weight: 4) - Prepare the 2022 Balance Sheet complete with its proper heading, classifying accounts based on their liquidity (weight: 3) 1. Associated Services Company paid twelve months insurance in advance totaling $9,000. At the end of the first month, the adjusting entry would include a: A) debit to Prepaid Insurance for $8,250. B) debit to Prepaid Insurance for $750. C) debit to Insurance Expense for $8,250. D) debit to Insurance Expense for $750. 2. Company A has a Note Receivable of $5,000. The note will be collected in installments. $1,000 is due within a year and the remainder is due after a year. The classification of the note on the balance sheet is: A) all $5,000 is a current asset. B) all $5,000 is a long term asset. C) $1,000 is a current asset and $4,000 is a long term asset. D) $4,000 is a current asset and $1,000 is a long term asset. 3. The trial balance is used to determine whether: A) total assets equal total liabilities. B) total debits equal total credits. C) total revenues plus gains equal total expenses plus losses. D) total increases in accounts equal total decreases in accounts 4. The entry to record the payment of $925 to a supplier for office supplies previously purchased on account would be: A) Cash 925 Accounts Payable 925 B) Accounts Payable 925 Cash 925 C) Office Supplies 925 Expense Cash 925 D) Office Supplies 925 Expense Accounts Payable 925 5. ABC Company had a beginning Accounts Receivable balance of $10,000, and had $12,000 of sales on account for the month. The ending Accounts Receivable balance was $14,000. Collections on Accounts Receivable for the month: A) were $12,000. B) were $36,000. C) were $8,000. D) can’t be determined from the information given.  FINANCIAL ACCOUNTING A.Y. 2020/2021 FINAL EXAM NAME_________________ SURNAME_________________ STUDENT ID NO. ________________ TIME ALLOWED 60 MINUTES A (7) The Balance Sheet of Christmas Ltd, follows: Table 1 – Christmas’s Balance Sheet Christmas Ltd. Balance Sheet as of December 31, 2020 Assets Liabilities and Shareholders' Equity Cash 286,000 Liabilities Accounts Receivable 188,200 Accounts Payable 134,000 Office Supplies 80,200 Salary Payable 44,000 Fixture 75,000 Allowance for Doubtful Accounts 30,000 (Accumulated Depreciation – Fixture) (29,700) Unearned Sales Revenue 124,500 Machinery 172,000 Notes Payable 225,000 (Accumulated Depreciation – Machinery) (95,000) Shareholders' Equity Share capital 107,000 Retained Earnings 12,200 Total Shareholders' Equity 119,200 Total 676,700 Total 676,700 Christmas Ltd experienced the following transactions during the year ended December 31, 2020: 1. The company declared dividends, € 6,000. 2. On December 22, 2020 Christmas paid a supplier € 20,000. The supplier will deliver finished goods on January 23, 2021. 3. The company collected cash on account, € 10,000. 4. On June 6, 2020 the owner of the company bought a country house, € 140,000, immediately paying € 50,000. Requirements: ‐ Journalize each relevant transaction (weight 4). ‐ Show the ending balance of Receivables and Cash (weight 3). B (15) Noel Inc. is a wholesale company, whose 2020 assets and liabilities are summarized as follows: Table 2 – Noel Inc.’s Assets and Liabilities Debit Credit Notes Receivable 110,000 Notes Payable (short‐term) 98,500 Accounts Receivable 60,850 Payables 116,400 Cash 55,000 Allowance for doubtful accounts 30,500 Inventories 32,400 Notes payable (long‐term) 236,000 Plant 322,600 Interest payable 12,400 (Accumulated Depr. Plant) (55,000) Allowance for doubtful accounts 3,000 Buildings 402,250 Shareholders' capital 119,800 (Accumulated Depr. Buildings) (282,500) Retained earnings 38,000 Trading securities 9,000 TOTAL 654,600 TOTAL 654,600 At December 31, 2020 Noel Inc. still has to record several journal entries, described here below. During the reporting period, the company: 1. On January 1, 2020 bought three used pieces of machinery in a € 300,000 lump‐sum purchase, € 15,000 cash and the remaining on account. An independent appraiser valued the fair value of the plants as shown in Table 3. Table 3 – Annual units of production Plant no. Appraisal Value Depreciation method 1 50,000 Straight line; useful life 5 years; residual value 5,000 2 120,000 Units of production; total units of production 10,000; units manufactured in 2020: 1,500 3 180,000 Double‐declining balance; useful life 5 years; residual value € 5,000 On May 1, 2020 Noel Inc. signed a note on account. 2. On September 1, 2020 the company purchased € 200,000 of 3% bonds issued by Epiphany Ltd, quote 103, on account. The bonds pay interests on September 1 and March 1 each year. Maturity date September 1, 2025. 3. On November 1, 2020 Noel Inc. purchased 400 Eve Ltd. shares at € 25 per share, cash, as a aila le for sale, lon term in estments. On December 5, sold 100 Eve’s shares for the market price of € 27 per share, immediately collecting cash. At year‐end the company adjusted the investment account to fair market value of € 23 per share. 4. Before 2020 year‐end adjustments, Noel Inc. has prepared the following aging schedule for Accounts Receivable. 1‐30 31‐60 61‐90 Over 90 Total Balance Days Days Days Days 60,850 15,600 20,050 13,200 12,000 Estimated Uncollectible 1% 3% 5% 20% Requirements: ‐ Journalize all entries related to the company’s 2020 transactions, also making the related adjustment entries (8) ‐ Show the ending balance of the following t‐accounts: Allowance for Doubtful Accounts, Trading Securities, Accumulated Depreciation and Machinery (4). ‐ Show how Noel Inc. would report Receivables, Bonds and Buildings on the Balance Sheet (3). C (5) 1. Which of the following should be included in the Machinery account? The cost of transporting the machinery to its setup location. The cost of a maintenance insurance plan after the machinery is up and running. The cost of calibrating the machinery after it has been used for a year. The cost of insurance while the machinery is being overhauled. 2. A PPE is acquired by a business on January 1, 20X6, for $30,000. The asset’s estimated residual value is $8,000 and its estimated life is 5 years. Management chooses to use straight‐line depreciation. On January 1, 20X8, management revises the total useful life to 6 years and the residual value to be zero. Compute the balance in Accumulated Depreciation on December 31, 20X8. $4,400 $5,300 $8,800 $14,100 3. A negative translation adjustment is: like a loss. reported as a contra item in the shareholders’ equity section of the balance sheet. part of other comprehensive income. all of the above. 4. A bond with a stated interest rate of 6% and a market rate of 8% was issued at a price reflecting the market interest rate. As the bond matures, its cost: is decreased. is ritten do n. is increased. is ad usted to ear end mar et alue. 5. The journal entry to record the receipt of a cash dividend arising from an available‐for‐sale investment held by a company includes: a debit to Unrealized Gain on Investment and a credit to Dividend Revenue. a debit to Cash and a credit to Dividend Revenue. a debit to Cash and a credit to Unrealized Gain on Investments. no journal entry. Only a memorandum entry is required.. Associated Services Company paid twelve months’ insurance in advance totaling $9,000. At the end of the first month, the adjusting entry would include a: debit to Prepaid Insurance for $8,250. debit to Prepaid Insurance for $750. debit to Insurance Expense for $8,250. debit to Insurance Expense for $750.. High Times Corporation owns 300 shares of Low Tide Company’s ordinary shares. Low Tide has 1,000,000 ordinary shares outstanding. High Times Corporation will show the investment on their books as: a liability. an equity.  C) an asset. D) none of the above. No entry is required since the actual liability amount is not known. 8. Company A has a Note Receivable of $5,000. The note will be collected in installments. $1,000 is due within a year and the remainder is due after a year. The classification of the note on the balance sheet is: A) all $5,000 is a current asset. B) all $5,000 is a long term asset. C) $1,000 is a current asset and $4,000 is a long term asset. D) $4,000 is a current asset and $1,000 is a long term asset. 9. A company purchased merchandise inventory on credit for $600 per unit, and later sold the inventory for $800 per unit. The journal entry to record the purchase of inventory included a debit to: A) Accounts Receivable. B) Inventory. C) Accounts Payable. D) Cost of Goods Sold. 10.The trial balance is used to determine whether: A) total assets equal total liabilities. B) total debits equal total credits. C) total revenues plus gains equal total expenses plus losses. D) total increases in accounts equal total decreases in accounts Financial accounting da fare: Soluzioni su BB + prove d’esame su BB Chapter 1 E1: 31-32 Q1: 40-41-43-44-45-46-47-48-49-50-51-52-53-54 P1: 61-63-68 E1: 23-24-25-33-34-36-37-38 Q1: 43-44-45-46-47-48-49-50-51-52-53-54 P1: 60-61-64-66 Chapter 2 S: 7-8-12-13 E: 20 Q: from 40 to 56 P: 62-63 (excluded requirement 1) -64 to prepare the mid-term I suggest you do the following exercises: - - E: 21-23-24-37 - Q: 57 - P: 65-66 and requirement 1 of ex. 64. - E: 29-30-31-32-34-35 - P: 67-69-70-71-72-73 Chapter 3 E: 22 and 35 (please, do not consider adjustment f in both cases) Q: 45-46-48-49-50- 51-52-53-54 please, find Chapter 3 suggested exercises listed below: E: 21-23-29-38-42 P: 63-71-72 Additional: E: 34-36 P. 70 suggested exercises related to the adjusted trial balance are E24 and P 66 (additional exercises: E37 and P73). 43 and 74. Chapter 4 suggested exercises are listed below: - E: 13-16-17-19 (please, do not consider the item "other comprehensive income")-26 (please, know that "provisions for unbilled expenses" should be considered as current liabilities, while "provisions for employee benefit" as non current liabilities)-28 - Q: 29-30-31-32-33-35-36-38 - P: 40-41 Additional exercises: - E: 21-24-25-27 (please, do not consider the item "other comprehensive income") - P: 47-48 Chapter 5 Dear students, please, note that you do not have to study pages 253 to 280 and pages 294 to 296. To practice, I suggest the following exercises: E: 42-44 (please note that total balance of receivable should be 170,000 instead of 180,000) Q: 57-58-59-60 P: 66-67 Furthermore, you can find the solutions to Ex. 27 in the "Chapter 5" Excel file ("Exercises" folder). Best regards, CD Chapter 6 please, find Chapter 6 exercises listed below: E: 16-17-19-20-22 Q: from 43 to 49 and from 51 to 53 P: 61-63 Chapter 7 Dear students, this is to inform you that today's lesson was recorded: you can find the recordings in the Blackboard "Panopto" section. Regarding today's topic - Net Realizable Value (NRV) - I suggest the following exercises: E: 21 Q: 50 P: 64 Additional exercises from Chapter 6: E: 28-29-30-32-33-34 P: 60-69-70-71-72-73 Furthermore, to practice the PPE initial recognition: exercises E29 and P62, Chapter 7. Best regards, Chapter 7 suggested exercises are listed below: E: 18-19-20 (do not consider the requirement related to the Cash Flow Statement) - 29-30 Q: from 47 to 51+54 P: 62-63-74 Best, CD Today's recordings are uploaded to Blackboard, Panopto section. Those who wish to practice can complete ex. 64 (we'll revise the first transaction next Monday). In addition, I suggest: E: 23-26 Q: 51-52-53-55-56-57-59 P: 65-67 (please, do not consider requirements related to goodwill). Best, Chapter 8 Dear students, please, know that a new version of the mock exam will be uploaded to Blackboard by tomorrow, in view of Friday's lesson. As for Chapter 7, you can find additional exercises listed below: E: 32-33-34 (do not consider requirements on cash flow) - 36-37-38-40 P: 71-72-74 (do not consider requirements on cash flow) - 75 (requirements on goodwill excluded) Suggested exercises for Chapter 8:: E: 13-14-26 Q: 37-38-39-41-43-44 P: 50 (only transactions carried out on 7/9 and 9/16) -51 (only transactions carried out on 3/16 and 5/21).  FINANCIAL ACCOUNTING A.Y. 2020/2021 FINAL EXAM – JUNE 24, 2021 NAME_________________ SURNAME_________________ STUDENT ID NO. ________________ TIME ALLOWED 75 MINUTES A (7) The Balance Sheet of Teddy Bear Ltd, follows: Table 1 – Teddy Bear’s Balance Sheet Teddy Bear Ltd. Balance Sheet as of December 31, 2020 Assets Liabilities and Shareholders' Equity Cash 27,000 Liabilities Accounts Receivable 135,500 Accounts Payable 105,000 Inventory 69,000 Salary Payable 12,300 Equipment 98,000 Allowance for Doubtful Accounts 5,000 (Accumulated Depreciation – Fixture) ‐39,200 Unearned Sales Revenue 28,300 Machinery 134,000 Notes Payable 81,500 (Accumulated Depreciation – Machinery) ‐67,000 Shareholders' Equity Share capital 105,000 Retained Earnings 20,200 Total Shareholders' Equity 125,200 Total 357,300 Total 357,300 Teddy Bear Ltd experienced the following transactions during the year ended December 31, 2020: 1. On April 5, 2020 provided services to a customer, € 120,000, immediately collecting € 85,000. On September 3, 2020 received a note receivable on account. 2. Accrued salary expense for December 2020, € 25,000, that the company will pay on January 11, 2021. 3. Declared dividends, € 5,000. 4. Returned € 20,000 worth of inventory. Requirements: ‐ Journalize each transaction (weight 4). ‐ Show the ending balance of Inventory and compute the ending balance of Shareholders’ Equity (weight 3). B (15) Rainbow Inc. is a wholesale company, whose 2020 assets and liabilities are summarized as follows: Table 2 – Rainbow Inc.’s Assets and Liabilities Debit Credit Notes Receivable 65,000 Notes Payable (short‐term) 35,600 Receivables 89,000 Payables 78,000 Cash 12,500 Allowance for doubtful accounts 12,300 Inventories 19,200 Notes payable (long‐term) 226,000 Furniture 153,000 Interest payable 15,600 (Accumulated Depr.Furniture) ‐45,900 Unearned revenue 21,000 Building 320,000 Shareholders' capital 130,000 (Accumulated Depr. Buildings) ‐60,800 Retained earnings 45,500 Trading securities 12,000 TOTAL 564,000 TOTAL 564,000 At December 31, 2020 Rainbow Inc. still has to record several journal entries, described here below. During the reporting period, the company: 1. On February 3, 2020 the company purchased land € 125,000 and signed a note payable. Rainbow also had to immediately pay title insurance costing € 4,500 and € 12,000 to remove an unwanted building. Furthermore, the company paid € 22,000 to build a fence around the property and € 3,000 for lighting the ground. On December Rainbow sold for € 220,000 the building purchased in 2018 (useful life 20 years; depreciation for 2020 not recorded yet; double declining balance method; estimated residual value € 10,000). Land improvements are depreciated using the straight line method, useful life 20 years, residual value € 5,000. 2. On October 15, 2020 sold goods to a customer (12 units, unit sale price € 3,000), immediately collecting € 11,000. The company determines inventories under the weighted average cost method. Inventory data during the reporting period are summarized in Table 3. Table 3 – Inventory data Date Transaction Units Unit cost Jan 1 Beginning Inventories 16 1,200 May 15 Purchase 9 1,300 Sep 10 Purchase 20 1,350 Oct 22 Sale 12 At the end of the reporting period the ending inventory net realizable value per unit amounts to € 1,500. 3. On November 1, 2019 signed a € 54,000 note payable that required annual payments of € 4,200 plus 4% interest on the unpaid balance each November 1 (starting from 2020). Referring to the reporting period (2020) the company has not made the related journal entries and the year‐end adjustments. 4. On October 1, 2020 the company purchased € 200,000 of 3% bonds issued by Orange Ltd, quote 98, on account. The bonds pay interests on October 1 and April 1 each year. Maturity date October 1, 2024. Requirements: ‐ Journalize all entries related to the company’s 2020 transactions, also making the related adjustment entries (8) ‐ Show the ending balance of the following t‐accounts: Inventories, Land, Notes Payable and Bonds (4) ‐ Show how Rainbow Inc. would report Receivables, Bonds and Interest Revenue on the Balance Sheet and the Income Statement (3).  FINANCIAL ACCOUNTING A.Y. 2020/2021 FINAL EXAM NAME_________________ SURNAME_________________ STUDENT ID NO. ________________ TIME ALLOWED 60 MINUTES A (7) The Balance Sheet of Christmas Ltd, follows: Table 1 – Christmas’s Balance Sheet Christmas Ltd. Balance Sheet as of December 31, 2020 Assets Liabilities and Shareholders' Equity Cash 286,000 Liabilities Accounts Receivable 188,200 Accounts Payable 134,000 Office Supplies 80,200 Salary Payable 44,000 Fixture 75,000 Allowance for Doubtful Accounts 30,000 (Accumulated Depreciation – Fixture) (29,700) Unearned Sales Revenue 124,500 Machinery 172,000 Notes Payable 225,000 (Accumulated Depreciation – Machinery) (95,000) Shareholders' Equity Share capital 107,000 Retained Earnings 12,200 Total Shareholders' Equity 119,200 Total 676,700 Total 676,700 Christmas Ltd experienced the following transactions during the year ended December 31, 2020: 1. The company declared dividends, € 6,000. 2. On December 22, 2020 Christmas paid a supplier € 20,000. The supplier will deliver finished goods on January 23, 2021. 3. The company collected cash on account, € 10,000. 4. On June 6, 2020 the owner of the company bought a country house, € 140,000, immediately paying € 50,000. Requirements: ‐ Journalize each relevant transaction (weight 4). ‐ Show the ending balance of Receivables and Cash (weight 3). B (15) Noel Inc. is a wholesale company, whose 2020 assets and liabilities are summarized as follows: Table 2 – Noel Inc.’s Assets and Liabilities Debit Credit Notes Receivable 110,000 Notes Payable (short‐term) 98,500 Accounts Receivable 60,850 Payables 116,400 Cash 55,000 Allowance for doubtful accounts 30,500 Inventories 32,400 Notes payable (long‐term) 236,000 Plant 322,600 Interest payable 12,400 (Accumulated Depr. Plant) (55,000) Allowance for doubtful accounts 3,000 Buildings 402,250 Shareholders' capital 119,800 (Accumulated Depr. Buildings) (282,500) Retained earnings 38,000 Trading securities 9,000 TOTAL 654,600 TOTAL 654,600 At December 31, 2020 Noel Inc. still has to record several journal entries, described here below. During the reporting period, the company: 1. On January 1, 2020 bought three used pieces of machinery in a € 300,000 lump‐sum purchase, € 15,000 cash and the remaining on account. An independent appraiser valued the fair value of the plants as shown in Table 3. Table 3 – Annual units of production Plant no. Appraisal Value Depreciation method 1 50,000 Straight line; useful life 5 years; residual value 5,000 2 120,000 Straight line; useful life 10 years Double‐declining balance; useful life 5 years; residual 3 180,000 value € 5,000 On May 1, 2020 Noel Inc. signed a note on account. 2. On September 1, 2020 the company purchased € 200,000 of 3% bonds issued by Epiphany Ltd, quote 98, on account. The bonds pay interests on September 1 and March 1 each year. Maturity date September 1, 2025. 3. On November 1, 2020 Noel Inc. purchased 400 Eve Ltd. shares at € 25 per share cash. On December 5, sold 100 Eve’s shares for the market price of € 27 per share, immediately collecting cash. At year‐end the company adjusted the investment account to fair market value of € 23 per share. 4. Before 2020 year‐end adjustments, Noel Inc. has prepared the following aging schedule for Accounts Receivable. 1‐30 31‐60 61‐90 Over 90 Total Balance Days Days Days Days 60,850 15,600 20,050 13,200 12,000 Estimated Uncollectible 1% 3% 5% 20% Requirements: ‐ Journalize all entries related to the company’s 2020 transactions, also making the related adjustment entries (8) ‐ Show the ending balance of the following t‐accounts: Allowance for Doubtful Accounts, Trading Securities, Accumulated Depreciation and Machinery (4). ‐ Show how Noel Inc. would report Receivables, Bonds and Buildings on the Balance Sheet (3). C (5) 1. Which of the following should be included in the Machinery account? A) The cost of transporting the machinery to its setup location. B) The cost of a maintenance insurance plan after the machinery is up and running. C) The cost of calibrating the machinery after it has been used for a year. D) The cost of insurance while the machinery is being overhauled. 2. A PPE is acquired by a business on January 1, 20X6, for $30,000. The asset’s estimated residual value is $8,000 and its estimated life is 5 years. Management chooses to use straight‐line depreciation. On January 1, 20X8, management revises the total useful life to 6 years and the residual value to be zero. Compute the balance in Accumulated Depreciation on December 31, 20X8. A) $4,400 B) $5,300 C) $8,800 D) $14,100 3. A negative translation adjustment is: A) like a loss. B) reported as a contra item in the shareholders’ equity section of the balance sheet. C) part of other comprehensive income. D) all of the above. 4. A bond with a stated interest rate of 6% and a market rate of 8% was issued at a price reflecting the market interest rate. As the bond matures: A) the Premium on Bonds Payable decreases. B) the Discount on Bonds Payable decreases. C) the Premium on Bonds Payable increases. D) the Discount on Bonds Payable increases. 5. The journal entry to record the receipt of a cash dividend arising from an available‐for‐sale investment held by a company includes: A) a debit to Unrealized Gain on Investment and a credit to Dividend Revenue. B) a debit to Cash and a credit to Dividend Revenue. C) a debit to Cash and a credit to Unrealized Gain on Investments. D) no journal entry. Only a memorandum entry is required. 6. Associated Services Company paid twelve months’ insurance in advance totaling $9,000. At the end of the first month, the adjusting entry would include a: A) debit to Prepaid Insurance for $8,250. B) debit to Prepaid Insurance for $750. C) debit to Insurance Expense for $8,250. D) debit to Insurance Expense for $750. 7. High Times Corporation owns 300 shares of Low Tide Company’s ordinary shares. Low Tide has 1,000,000 ordinary shares outstanding. High Times Corporation will show the investment on their books as: A) a liability. B) an equity.  C) an asset. D) none of the above. No entry is required since the actual liability amount is not known. 8. Company A has a Note Receivable of $5,000. The note will be collected in installments. $1,000 is due within a year and the remainder is due after a year. The classification of the note on the balance sheet is: A) all $5,000 is a current asset. B) all $5,000 is a long term asset. C) $1,000 is a current asset and $4,000 is a long term asset. D) $4,000 is a current asset and $1,000 is a long term asset. 9. A company purchased merchandise inventory on credit for $600 per unit, and later sold the inventory for $800 per unit. The journal entry to record the purchase of inventory included a debit to: A) Accounts Receivable. B) Inventory. C) Accounts Payable. D) Cost of Goods Sold. 10.The trial balance is used to determine whether: A) total assets equal total liabilities. B) total debits equal total credits. C) total revenues plus gains equal total expenses plus losses. D) total increases in accounts equal total decreases in accounts D (4) Notes to the accounts presented in Pirelli’s annual report show the following monetary amounts related to Inventories. ‐ Did the company record any increase in WIP? ____________________________________________________________________________________ ________________________________________________________________________ ‐ Did the company paid suppliers in advance? ____________________________________________________________________________________ ________________________________________________________________________ 2-5A – Journal Entry Bootcamp JOURNAL ENTRY BOOTCAMP Done Right Landscaping has been in business for years. The company has the following transactions during the month of August: Aug 1 Borrowed $50,000 from the bank. Signed a note payable. Aug 2 Purchased landscaping equipment for cash - $10,000 Aug 3 Paid $100 to repair a broken wheel on a lawn mower. Aug 4 Provided landscaping service for a customer, the customer paid cash of $75 for the service. Aug 5 Purchased (and used) fuel in the lawn mowers, it cost $150 cash. Aug 6 Provided landscaping service for 3 customers, $100 each. 2 paid, one will pay next week. Aug 7 Received, but did not pay the telephone bill - $50. The bill is due in 30 days. Aug 8 Purchased a new piece of landscaping equipment – a line trimmer – for $500 on account. Aug 9 Did social media advertising – paid $200. Aug 10 Completed a sod installation job. Billed $2,000, payment is due in 30 days. Aug 11 Collected the amount owing from the August 6 transaction. Aug 12 Completed a major landscaping job. Billed $4,500, collected half. Aug 13 Received and paid the electricity bill - $400. Aug 14 Purchased a new trailer for $1,200 cash. Aug 15 Paid wages to employees of $2,000. Aug 16 Had a lawnmower repaired. Cost $600. Payment is due in 30 days. Aug 17 Paid the phone bill from August 7. Aug 18 Collected the other half of the amount owing from August 12. Aug 19 Judy Smith invested $25,000 into the company in exchange for common shares. Aug 20 Rented tools for a special job – paid $350 cash. Aug 21 Completed and billed for the special job – client paid $1,800. Aug 22 An upset client threatened to sue – our company paid legal fees of $400 to consult with a lawyer – the client eventually changed their mind about suing. Aug 23 Took a local business development training course through the local college – paid $180. Aug 24 Purchased a used leaf blower on account – the $275 bill is due next month. Aug 25 Completed lawnmowing work at 8 houses. Billed $50 per house. Received payment from 3 of the 8 clients. Aug 26 Received a bill for business license fees - $240. The bill has not yet been paid. Aug 27 Collected full payment from the August 10 job. Aug 28 Paid the lawnmower repair bill from August 16. Aug 29 Paid wages to employees of $2,000. Aug 30 Paid interest of $250 on the note (from August 1). Aug 31 Declared and paid a cash dividend of to the shareholders $1,000. Required: Record all necessary journal entries based on the transactions above.  FINANCIAL ACCOUNTING A.Y. 2022/2023 MID-TERM EXAM – MARCH 20, 2023 - A NAME_________________ SURNAME_________________ STUDENT ID NO. ________________ TIME ALLOWED 90 MINUTES A. Recording transactions (weight: 6) The Balance Sheet of Spring Ltd. as of December 31, 2021, follows: Table 1 – Moon Balance Sheet Moon Ltd. Balance Sheet as of December 31, 2021 Liabilities and Shareholders' Assets Equity Cash 203,600 Liabilities Accounts Receivable 190,100 Accounts Payable 186,000 Prepaid Rent 96,000 Salary Payable 44,500 Furniture 59,200 Interest payable 46,000 (Accumulated Depreciation – -29,700 Unearned Service Revenue 123,500 Furniture) Supplies 194,000 Notes Payable 193,000 Shareholders' Equity Share capital 105,000 Retained Earnings 15,200 Total Shareholders' Equity 123,200 Total 713,200 Total 713,200 Spring Ltd experienced the following transactions during the year ended December 31, 2022: 1. Sold finished goods, € 75,000 on account. 2. Lent € 28,000 to a subsidiary company, receiving a note receivable. 3. On May 15, 2022 purchased a building, € 105,000, paying € 38,000 cash and the remainder on account. On August, 28 2022 paid € 30,000 on account. 4. The company’s owner, Mr. White, sold his holiday home for € 314,000. 5. On November 12, 2022 paid rent in advance, € 18,000. 6. Collected cash on account, € 55,000. Requirements: Journalize each transaction and record it in the T-accounts (weight: 6).  B. Year-end adjusting entries (weight: 15) Moon Ltd.’s accountants must prepare the company 2022 financial statements. Starting from the 2021 Balance Sheet and considering Section A T-accounts, the following adjustments are needed. 1. Accrued interest revenue, € 2,300. 2. Supplies on hand at the end of the reporting period, € 35,000. 3. Prepaid Rent unadjusted ending balance relates to the period October 1, 2022 - September 30, 2023. 4. Depreciation of building and furniture for the year (estimated useful lives of 20 and 10 years, respectively). 5. Accrued salary expense, five-days payroll of € 6,000. December 31, 2022 falls on Thursday. 6. Earned service revenue collected in advance, € 118,000. Requirements: - Journalize adjusting entries and post them to T-accounts (weight: 6) - Show the adjusted ending balance of Prepaid Rent and Retained Earnings (weight: 2) - Journalize closing entries (weight: 4) - Prepare the 2022 Balance Sheet complete with its proper heading, classifying accounts based on their liquidity (weight: 3) 1. Associated Services Company paid twelve months insurance in advance totaling $9,000. At the end of the first month, the adjusting entry would include a: A) debit to Prepaid Insurance for $8,250. B) debit to Prepaid Insurance for $750. C) debit to Insurance Expense for $8,250. D) debit to Insurance Expense for $750. 2. Company A has a Note Receivable of $5,000. The note will be collected in installments. $1,000 is due within a year and the remainder is due after a year. The classification of the note on the balance sheet is: A) all $5,000 is a current asset. B) all $5,000 is a long term asset. C) $1,000 is a current asset and $4,000 is a long term asset. D) $4,000 is a current asset and $1,000 is a long term asset. 3. The trial balance is used to determine whether: A) total assets equal total liabilities. B) total debits equal total credits. C) total revenues plus gains equal total expenses plus losses. D) total increases in accounts equal total decreases in accounts 4. The entry to record the payment of $925 to a supplier for office supplies previously purchased on account would be: A) Cash 925 Accounts Payable 925 B) Accounts Payable 925 Cash 925 C) Office Supplies 925 Expense Cash 925 D) Office Supplies 925 Expense Accounts Payable 925 5. ABC Company had a beginning Accounts Receivable balance of $10,000, and had $12,000 of sales on account for the month. The ending Accounts Receivable balance was $14,000. Collections on Accounts Receivable for the month: A) were $12,000. B) were $36,000. C) were $8,000. D) can’t be determined from the information given.  MULTIPLE CHOICE QUESTIONS 1‐A 2‐B 3‐A 4‐C 5‐B 6‐D 7‐C 8‐C 9‐B 10‐B  FINANCIAL ACCOUNTING A.Y. 2020/2021 FINAL EXAM NAME_________________ SURNAME_________________ STUDENT ID NO. ________________ TIME ALLOWED 60 MINUTES A (7) The Balance Sheet of Christmas Ltd, follows: Table 1 – Christmas’s Balance Sheet Christmas Ltd. Balance Sheet as of December 31, 2020 Assets Liabilities and Shareholders' Equity Cash 286,000 Liabilities Accounts Receivable 188,200 Accounts Payable 134,000 Office Supplies 80,200 Salary Payable 44,000 Fixture 75,000 Allowance for Doubtful Accounts 30,000 (Accumulated Depreciation – Fixture) (29,700) Unearned Sales Revenue 124,500 Machinery 172,000 Notes Payable 225,000 (Accumulated Depreciation – Machinery) (95,000) Shareholders' Equity Share capital 107,000 Retained Earnings 12,200 Total Shareholders' Equity 119,200 Total 676,700 Total 676,700 Christmas Ltd experienced the following transactions during the year ended December 31, 2020: 1. The company declared dividends, € 6,000. 2. On December 22, 2020 Christmas paid a supplier € 20,000. The supplier will deliver finished goods on January 23, 2021. 3. The company collected cash on account, € 10,000. 4. On June 6, 2020 the owner of the company bought a country house, € 140,000, immediately paying € 50,000. Requirements: ‐ Journalize each relevant transaction (weight 4). ‐ Show the ending balance of Receivables and Cash (weight 3). B (15) Noel Inc. is a wholesale company, whose 2020 assets and liabilities are summarized as follows: Table 2 – Noel Inc.’s Assets and Liabilities Debit Credit Notes Receivable 110,000 Notes Payable (short‐term) 98,500 Accounts Receivable 60,850 Payables 116,400 Cash 55,000 Allowance for doubtful accounts 30,500 Inventories 32,400 Notes payable (long‐term) 236,000 Plant 322,600 Interest payable 12,400 (Accumulated Depr. Plant) (55,000) Allowance for doubtful accounts 3,000 Buildings 402,250 Shareholders' capital 119,800 (Accumulated Depr. Buildings) (282,500) Retained earnings 38,000 Trading securities 9,000 TOTAL 654,600 TOTAL 654,600 At December 31, 2020 Noel Inc. still has to record several journal entries, described here below. During the reporting period, the company: 1. On January 1, 2020 bought three used pieces of machinery in a € 300,000 lump‐sum purchase, € 15,000 cash and the remaining on account. An independent appraiser valued the fair value of the plants as shown in Table 3. Table 3 – Annual units of production Plant no. Appraisal Value Depreciation method 1 50,000 Straight line; useful life 5 years; residual value 5,000 2 120,000 Units of production; total units of production 10,000; units manufactured in 2020: 1,500 3 180,000 Double‐declining balance; useful life 5 years; residual value € 5,000 On May 1, 2020 Noel Inc. signed a note on account. 2. On September 1, 2020 the company purchased € 200,000 of 3% bonds issued by Epiphany Ltd, quote 103, on account. The bonds pay interests on September 1 and March 1 each year. Maturity date September 1, 2025. 3. On November 1, 2020 Noel Inc. purchased 400 Eve Ltd. shares at € 25 per share, cash, as a aila le for sale, lon term in estments. On December 5, sold 100 Eve’s shares for the market price of € 27 per share, immediately collecting cash. At year‐end the company adjusted the investment account to fair market value of € 23 per share. 4. Before 2020 year‐end adjustments, Noel Inc. has prepared the following aging schedule for Accounts Receivable. 1‐30 31‐60 61‐90 Over 90 Total Balance Days Days Days Days 60,850 15,600 20,050 13,200 12,000 Estimated Uncollectible 1% 3% 5% 20% Requirements: ‐ Journalize all entries related to the company’s 2020 transactions, also making the related adjustment entries (8) ‐ Show the ending balance of the following t‐accounts: Allowance for Doubtful Accounts, Trading Securities, Accumulated Depreciation and Machinery (4). ‐ Show how Noel Inc. would report Receivables, Bonds and Buildings on the Balance Sheet (3). C (5) 1. Which of the following should be included in the Machinery account? The cost of transporting the machinery to its setup location. The cost of a maintenance insurance plan after the machinery is up and running. The cost of calibrating the machinery after it has been used for a year. The cost of insurance while the machinery is being overhauled. 2. A PPE is acquired by a business on January 1, 20X6, for $30,000. The asset’s estimated residual value is $8,000 and its estimated life is 5 years. Management chooses to use straight‐line depreciation. On January 1, 20X8, management revises the total useful life to 6 years and the residual value to be zero. Compute the balance in Accumulated Depreciation on December 31, 20X8. $4,400 $5,300 $8,800 $14,100 3. A negative translation adjustment is: like a loss. reported as a contra item in the shareholders’ equity section of the balance sheet. part of other comprehensive income. all of the above. 4. A bond with a stated interest rate of 6% and a market rate of 8% was issued at a price reflecting the market interest rate. As the bond matures, its cost: is decreased. is ritten do n. is increased. is ad usted to ear end mar et alue. 5. The journal entry to record the receipt of a cash dividend arising from an available‐for‐sale investment held by a company includes: a debit to Unrealized Gain on Investment and a credit to Dividend Revenue. a debit to Cash and a credit to Dividend Revenue. a debit to Cash and a credit to Unrealized Gain on Investments. no journal entry. Only a memorandum entry is required.. Associated Services Company paid twelve months’ insurance in advance totaling $9,000. At the end of the first month, the adjusting entry would include a: debit to Prepaid Insurance for $8,250. debit to Prepaid Insurance for $750. debit to Insurance Expense for $8,250. debit to Insurance Expense for $750.. High Times Corporation owns 300 shares of Low Tide Company’s ordinary shares. Low Tide has 1,000,000 ordinary shares outstanding. High Times Corporation will show the investment on their books as: a liability. an equity.  C) an asset. D) none of the above. No entry is required since the actual liability amount is not known. 8. Company A has a Note Receivable of $5,000. The note will be collected in installments. $1,000 is due within a year and the remainder is due after a year. The classification of the note on the balance sheet is: A) all $5,000 is a current asset. B) all $5,000 is a long term asset. C) $1,000 is a current asset and $4,000 is a long term asset. D) $4,000 is a current asset and $1,000 is a long term asset. 9. A company purchased merchandise inventory on credit for $600 per unit, and later sold the inventory for $800 per unit. The journal entry to record the purchase of inventory included a debit to: A) Accounts Receivable. B) Inventory. C) Accounts Payable. D) Cost of Goods Sold. 10.The trial balance is used to determine whether: A) total assets equal total liabilities. B) total debits equal total credits. C) total revenues plus gains equal total expenses plus losses. D) total increases in accounts equal total decreases in accounts