FATÝH UNIVERSITY

FACULTY OF ECONOMIC AND ADMINISTRATIVE SCIENCES

DEPARTMENT OF MANAGEMENT

MAN 201 PRINCIPLES OF ACCOUNTING I

FINAL EXAM

Instructor: ALI COSKUN

Duration: 100 Minutes                                                                                                                         January 23, 2003

QUESTIONS

Question 1. ATC Corporation is a merchandising company that sells computer parts. ATC Corporation uses a perpetual inventory system. It records sales at the gross invoice price and purchases at net cost. The following transactions were completed by the company  during June 2002:

June  1 Purchased an office building for $150,000, paying $100,000 cash and signing a note payable for balance.

June  2 Purchased equipment for $20,000 cash.

June 7 Purchased 25 CTX monitors from Syberspace Inc. on account at a unit cost of $200. The terms of purchase was 2/10, n/30.

June 9 Sold 6 CTX monitors to Computer World Inc. on account for $350 each, terms 1/10, n/30.

June 10 ATC Corporation returned 2 CTX monitors purcased on June 7 to Syberspace Inc..

June 11 Sold 10 CTX monitors to Best Corporation for $3,200 cash.

June 13 Computer World returned 2 CTX monitors purchased on June 9. The amount reduced from the account receivable of Computer World Inc..

June 14 Purchased one year insurance policy for $2,500.

June 15 Purchased 20 CTX monitors from Syberspace Inc. on account at $200 each. The terms of purchase was 2/10, n/30.

June 16 Paid the accounts payable for the purchases on June 7 within discount period.

June 19 Sold 10 CTX monitors to Milkyway Company on account. The total sales price was $3,700, terms 4/10, n/60.

June 22 A $1,500 invoice was received from Quick Repairs for repairs done in the ATC’s office during June.

June 26 Collected accounts receivable from the sales on June 19. 

June 30 Paid the accounts payable for the purchases on June 15.

June 30 Paid employees’ salary, $2,000.

 

Required:

a.       Prepare the journal entries to record these transactions (30 points)

b.      Prepare the subsidiary inventory ledger for CTX monitors for the month. There was no CTX monitors in the inventory on June 1. (10 points)

c.       How much is the total amount of account receivables from Computer World, assuming the balance on June 1 was zero. (5 points)

 

Question 2. Altamore Company, adjusts and closes its accounts monthly. Before any month-end adjustments are made, operating income of Altamore Company is $100,000. However, the following adjustments are necessary:

§         Services performed for clients but not yet recorded or collected is $3,000

§         $1,000 of prepaid rent is expired.

§         Accrued wages payable amount to $2,500.

§         Interest accrued on deposits in banks is $5,000.

§         Depreciation for the month is $2,900.

§         Supplies consumed amout to $1,000.

 

Required:

a.       Prepare adjusting entries for the items listed. (12 points)

b.      After adjusting entries are made how much would be Altamore Company 's operating income before taxes for the month. (4 points)

c.       If the income taxes rate is 40%, how much would be net income of Altamore Company for the month. (4 points)

 

Question 3.  Transform Company is a merchandising company that uses a periodic inventory system. The Company adjusts and closes its accounts monthly.  The following is the adjusted trial balance of the company at January 31, 2002

 

Transform Company

ADJUSTED TRIAL BALANCE

January 31, 2002

Accounts

Cash

Accounts receivable

Notes receivable

Prepaid rent

Inventory

Land

Equipment

Accumulated Depreciation: Equipment

Accounts payable

Interest payable

Notes payable

Capital stock

Dividends

Retained earning

Sales

Sales returns and allowances

Sales discounts

Purchases

Cost of goods sold

Salaries expense

Depreciation expense: Equipment

Insurance expense

Rent expense

Purchase discount lost

Debit

$  27,500

199,500

25,000

12,000

22,000

100,000

30,000

 

 

 

 

 

7,000

 

 

3,500

9,800

275,000

0

12,500

250

1,200

3,100

1,000

Credit

 

 

 

 

 

 

 

$    2,250

60,500

2,000

90,000

100,000

 

55,000

419,600

 

 

 

 

 

 

 

 

 

 

 

$ 729,350

 

$ 729,350

 

Assume that, pyhsical counts at January 31, 2002 shows that amount of inventory on hand was $25,000.

 

Required:

a.        Prepare an income statement for the month ended January 31, 2002. (10 points)

b.       Prepare a statement of retained earnings for the month ended January 31, 2002. (10 points)

c.        Prepare a balance sheet at January 31, 2002. (10 points)

d.       Prepare journal entries to close the accounts. (5 points)