Mid-term Exam_Old Exams_22-23 (4) PDF

[25 QUESTIONS. EACH QUESTION CARRIES MAXIMUM OF 3 POINTS] 1. Journalize the following transaction in a proper manner (with date, appropriate accounts and indicating whether these accounts are A/L/SE and the amount to be debited/credited): On January 15, Company XYZ borrowed €40,000 from the...

[25 QUESTIONS. EACH QUESTION CARRIES MAXIMUM OF 3 POINTS] 1. Journalize the following transaction in a proper manner (with date, appropriate accounts and indicating whether these accounts are A/L/SE and the amount to be debited/credited): On January 15, Company XYZ borrowed €40,000 from the bank. A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 2. Journalize the following transaction in a proper manner (with date, appropriate accounts and indicating whether these accounts are A/L/SE and the amount to be debited/credited): On January 30, Company XYZ received and paid utility bill of €700. A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 3. Journalize the following transaction in a proper manner (with date, appropriate accounts and indicating whether these accounts are A/L/SE and the amount to be debited/credited): On February 15, Company XYZ performed services for clients on account totaling €6,500. A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) (PLEASE GO TO NEXT PAGE FOR THE REST OF THE EXAM) 1 4. Journalize the following transaction in a proper manner (with date, appropriate accounts and indicating whether these accounts are A/L/SE and the amount to be debited/credited): On March 1, Company XYZ purchased supplies on account for €4000. A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 5. On March 15, Company XYZ paid €2000 on account (related to the above question). A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 6. Give an example of a transaction (WITH A JOURNAL ENTRY) that has the following effect on the accounting equation: Increase one asset and decrease another asset. Date A/L/SE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 7. Give an example of a transaction (WITH A JOURNAL ENTRY) that has the described effect on the accounting equation: Decrease an asset and decrease shareholders’ equity. Date A/L/SE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) (PLEASE GO TO NEXT PAGE FOR THE REST OF THE EXAM) 2 8. Give an example of a transaction (WITH A JOURNAL ENTRY) that has the described effect on the accounting equation: Increase an asset and increase a liability. Date A/L/SE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) Questions 9-12 are based on the following information: 9. Journalize Transaction no. (1) in a proper manner (with date, appropriate accounts and indicating whether these accounts are A/L/SE and the amount to be debited/credited): A/L/SE Trn. No. ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 1 10. Journalize Transaction no. (3) in a proper manner (with date, appropriate accounts and indicating whether these accounts are A/L/SE and the amount to be debited/credited): A/L/SE Trn. ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 3 (PLEASE GO TO NEXT PAGE FOR THE REST OF THE EXAM) 3 11. Journalize Transaction no. (5) in a proper manner (with date, appropriate accounts and indicating whether these accounts are A/L/SE and the amount to be debited/credited): A/L/SE Trn. No. ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 5 12. Journalize Transaction no. (6) in a proper manner (with date, appropriate accounts and indicating whether these accounts are A/L/SE and the amount to be debited/credited): A/L/SE Trn. ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 6 13. On March 1, Sunshine Travel paid €900 for supplies. At March 31, Sunshine has €650 of supplies left in hand. Make the required proper journal entry at March 1. A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 14. On March 1, Sunshine Travel paid €900 for supplies. At March 31, Sunshine has €650 of supplies left in hand. Make the required proper journal entry (adjustment) at March 31. A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) (PLEASE GO TO NEXT PAGE FOR THE REST OF THE EXAM) 4 15. Equipment was purchased with cash on Jan 1, 2016 at a cost of €150,000. The equipment’s useful life is 5 years. There is no residual value. Make the required journal entry for the purchase of the equipment at Jan 1, 2016. A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 16. Equipment was purchased on Jan 1, 2016 at a cost of €150,000. The equipment’s useful life is 5 years. There is no residual value. Make the required journal entry (adjustment) for depreciation expense at Dec 31, 2017. A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 17. A company made sales of €820 million during 2016. Of this amount, the company collected cash for €800 million. The company’s cost of goods sold was €220 million, and all other expenses for the year totaled €370 million. Also during 2016, the company paid €380 million for purchasing inventory. How much was the company’s net income for 2016? Show the calculations. (PLEASE GO TO NEXT PAGE FOR THE REST OF THE EXAM) 5 18. Xiaomi Inc. began business with cash of €15,500. Xiaomi Inc. then bought supplies for €3,500 on account. In addition, Xiaomi Inc. bought and paid €8,000 for a machine. Answer these questions. a. How much in total assets does Xiaomi Inc. have? b. How much in liabilities does Xiaomi Inc. owe? What is the liability account called? 19. Isabella, opened a clothing company Lyle. The business completed the following transactions: a. Aug 1: Isabella invested €25,000 cash to open the store. The company issued shares to Isabella. b. Aug 1: The company purchased supplies on account totaling €8,000 c. Aug 2: The company paid monthly rent of €2,500. d. Aug 3: Recorded €15,000 revenue for sale of clothes. Received Cash of €9,000 and recorded the remaining on account. After these transactions, how much cash does the business have as the closing balance? Draw a Cash T-account to show your answer. (PLEASE GO TO NEXT PAGE FOR THE REST OF THE EXAM) 6  Questions 20 & 21 are based on the following information: The following transactions are Company ABC's only activities during January through April: January 14 Bought cleaning supplies on account for €28, with payment to the supplier due in 90 days. February 3 Performed a job on account for Company MNO for €35, collectible from Company MNO in 30 days. Used up all the cleaning supplies purchased on January 14. March 16 Collected the €35 receivable from Company MNO April 22 Paid the €28 owed to the supplier from the January 14 transaction. 20. If Company ABC is following accrual accounting, then EXPLAIN in which month should the company record the: i. Revenue of €35; ii. Cost of the cleaning supplies of €28 as expense. 21. If Company ABC is following cash-based accounting, then EXPLAIN in which month should the company record the: i. Revenue of €35; & ii. Cost of the cleaning supplies of €28 as expense. (PLEASE GO TO NEXT PAGE FOR THE REST OF THE EXAM) 7 22. On January 1 of the current year, Company XYZ paid €1,200 rent to cover six months What is the adjusting entry related to rent made by the company at the end of April. Make the journal entry on April 30. [Assume that the company did not make any adjustments between Jan 1 and April 30]. A/L/SE Date ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT (+/-) 23. The Unearned Revenue account of Company XYZ began 2016 with a balance of €3,000 and ended 2016 with a balance of €18,000. During 2016, the Unearned Revenue account was credited for €27,000 that Company XYZ will earn later. Based on these facts, how much revenue did Company earn in 2016? Show in a T-account for Unearned Revenue. (PLEASE GO TO NEXT PAGE FOR THE REST OF THE EXAM) 8  Question 24 and 25 are based on the following information: This question deals with the items and the amounts that two entities, Travel Inc. ( a travel agency) and IHG (a company that is a customer of the travel agency), should report in their financial statements. On July 31, 2016, Travel Inc. collected €8,000 in advance from IHG, the client company. Under the contract, Travel Inc. is obligated to perform bookings for IHG evenly during the 12 months ending July 30, 2017. 24. Assume you are an accountant in Travel Inc. Fill in the following blanks: i. Travel Inc.’s Income Statement for the year ended December 31, 2016, will report _________________________________________ of € _____________________. ii. Travel Inc.’s Balance Sheet at December 31, 2016, will report __________________________________________ of € _____________________. 25. Assume you are an accountant in IHG. Fill in the following blanks: i. IHG’s Income Statement for the year ended December 31, 20X6, will report __________________________________________ of € _____________________. ii. IHG’s Balance Sheet at December 31, 2016, will report ______________________ of € ______________________________. ____________________________END OF EXAM___________________________ 9