Accounting Principles I OnlineChapters 3 & 4 Exam Part IINAME­­­_____

Accounting Principles I OnlineChapters 3 & 4 Exam Part IINAME­­­_____.

Accounting Principles I – Online
Chapters 3 & 4 – Exam – Part II

 

 

 

NAME:­­­_____

 

 

PART A (24 Points)
In the journal for McGill Company provided below, record the appropriate adjusting entries as of December 31. Please note that McGill Company has not prepared any adjusting entries for the current year prior to December 31.

a. The Store Supplies account showed a beginning balance of $700 and purchases of $500. Unused store supplies at the end of the year were counted and totaled $300.

b. On December 1, the company paid three months rent in advance, debiting Prepaid Rent for $1,800.

c. Equipment purchased January 1of the current year for $26,000 was estimated to have a useful life of 5 years with $1,000 salvage value.

d. Wages are paid each Friday for a 5-day week. The salary is set at a fixed rate of $800 per day, and the accounting period ended on Wednesday.

e. On November 1, the company accepted a $10,000, 12%, 9-monthNote Receivable. An adjusting entry should be made to accrue the interest on this note.

f. The balance in Unearned Commissions Revenue at December 31, is $1,400. This represents a customer deposit for which one-half has been earned as of December 31.

 

 

 

McGILL COMPANY GENERAL JOURNAL

DATE ACCOUNT TITLES DR CR
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART B (30 Points)

Below is an Adjusted Trial Balance for Green Company for the year ended December 31. In the space provided on the next two pages:

Required:
a. Record the appropriate closing entries. (Third line explanations are not necessary.)
b. Prepare a Post-Closing Trial Balance.

GREEN COMPANY
Adjusted Trial Balance
December 31, 20xx

 

  DEBIT CREDIT
Cash $ 1,150  
Account Receivable 3,600  
Office Supplies 1,500  
Office Equipment 10,000  
Accumulated Depreciation, Office Equipment   $ 4,000
Accounts Payable   700
C.R. Green, Capital   8,000
C.R. Green, Drawing 1,200  
Commissions Revenue   7,100
Interest Revenue   200
Depreciation Expense 200  
Salary Expense 2,200  
Utility Expense 150  
TOTALS $ 20,000 $ 20,000

 

 

GREEN COMPANY GENERAL JOURNAL

DATE ACCOUNT TITLE DR CR
       
       
       
       
       
       
       
       
       
       
       
       
       
       

 

GREEN COMPANY
Post-Closing Trial Balance
December 31, 20xx

 

  DEBIT CREDIT
     
     
     
     
     
     
     
     
     
     
     

PART C (16 Points)

ESSAY QUESTIONS

Required: For EACH of the two questions below, write at least one full paragraph in response to the question asked

1. Explain why adjusting entries should be made at the end of an accounting period. There are two categories of adjusting entries, Accrual Adjustments and Deferral Adjustments. Explain each category fully and give at least one example of each.

2. The long-term liability section of Beta Company's Balance Sheet includes the following accounts:

Notes Payable (due in 5 years) $100,000
Mortgage Payable 250,000
Salaries Payable 75,000
Accumulated Depreciation 125,000
Total long-term liabilities $550,000

Beta Company is an established company and does not experience any financial difficulties or have any cash flow problems. Identify at least two items in the long-term liability section that are questionable and explain where the placement on the balance sheet would be more appropriate and why.

Accounting Principles I OnlineChapters 3 & 4 Exam Part IINAME­­­_____

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