FATİH UNIVERSITY
FACULTY OF ECONOMIC AND ADMINISTRATIVE SCIENCES
DEPARTMENT OF MANAGEMENT & DEPARTMENT OF ECONOMICS
MAN 201 PRINCIPLES OF ACCOUNTING I
MIDTERM EXAM II
Instructor: Ali COSKUN
Duration: 80 Minutes December 3, 2004
Question 1. Super Record Company is a small recording studio. Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, 2003, follows.
SUPER RECORD COMPANY
Unadjusted Trial Balance
December 31, 2003
Cash.............................................................................. $ 21,000
Accounts receivable................................................... 31,000
Notes receivable ......................................................... 50,000
Studio supplies............................................................ 1,200
Unexpired insurance................................................... 2,200
Prepaid studio rent...................................................... 6,400
Recording equipment................................................. 168,000
Accumulated depreciation: recording equipment.. $ 70,000
Notes payable.............................................................. 60,000
Interest payable........................................................... 1,500
Unearned studio revenue.......................................... 3,800
Capital stock................................................................ 30,000
Retained earnings....................................................... 20,600
Studio revenue earned............................................... 201,100
Salaries expense.......................................................... 17,000
Supplies expense......................................................... 1,700
Insurance expense...................................................... 1,100
Depreciation expense: recording equipment........... 38,500
Studio rent expense.................................................... 16,600
Interest expense.......................................................... 5,300
Utilities expense.......................................................... 1,500
Income taxes expense................................................. 25,500 ________
$387,000 $387,000
1. The useful life of the studio’s recording equipment is estimated to be four years (or 48 months). The straight-line method of depreciation is used.
2. Studio supplies on hand at December 31 amount to $600.
3. Records show that $13,000 in studio revenue had not yet been billed or recorded as of December 31.
4. On October 1, 2003, the studio purchased a six months insurance policy for $3,300. The entire premium was initially debited to Unexpired Insurance.
5. On September 1, 2003, the studio borrowed $60,000 by signing a 12-month, 10% note payable to First Federal Bank of Stamford. The entire $60,000 plus 12 months’ interest is due in full on August 31, 2004.
6. Records show that $2,000 of cash receipts originally recorded as Unearned Studio Revenue had been earned as of December 31.
7. The studio is located in a rented building. On November 1, 2003, the studio paid $8,000 rent in advance for five months. The entire amount was debited to Prepaid Studio Rent.
8. Salaries earned by recording technicians that remain unpaid at December 31 amount to $700.
a. For each of the numbered paragraphs, prepare the necessary adjusting entry.
b. Prepare an adjusted trial balance as of December 31, 2003.
Question 2. Best Service Company is a service company. The Company adjusts and closes its accounts monthly. The following is the adjusted trial balance of the company at March 31, 2004.
|
BEST
SERVICE COMPANY Adjusted Trial Balance March 31, 2004 |
||
Accounts
Cash Accounts receivable Notes receivable Prepaid rent Supplies Equipment Accumulated Depreciation: Equip. Accounts payable Notes payable Salaries payable Unearned service revenue Capital stock Dividends Retained earning Service revenue Salaries expense Repair & maintenance expense Depreciation expense: Equipment Insurance expense Rent expense Income taxes expense |
Debit
$
31,800 85,500 67,000 3,000 2,000 60,000 1,000 54,500 19,300 500 3,300 9,000 13,700 |
Credit
$
24,500 10,500 82,000 9,000 30,300 10,000 55,000 129,300 |
|
|
$ 350,600 |
$ 350,600 |
Required:
a. Prepare an income statement for the month ended March 31, 2004.
b. Prepare a statement of retained earnings for the month ended March 31, 2004.
c.
Prepare a balance sheet at March 31, 2004.
d. Prepare
journal entries to close the accounts.
Question 3.
* Which of the following is not an asset?
a. Prepaid rent b. Unexpired insurance c. Unearned cient fees d. Fees receivable
* Which accounts will appear on an after-closing trial balance?
a. Insurance expense b. Prepaid rent c. Dividends d. Client fees earned
* Which of the following is a liability?
a. Prepaid rent b. Unexpired insurance c. Unearned cient fees d. Fees receivable
* Accumulated depreciation is
a. An expense b. An asset c. A liability d. A contra-asset
* On which statement will dividends appear?
a. Income statement b. Statement of retained earnings c. Balance sheet d. All three statements
*A Company purchased equipment on March 1 2003 for $45,000. If this asset has an estimated useful life of ten years, what is the book value of the furniture on July 1 2004? (Adjusting entries are performed on a monthly basis)
Answer: $ .......................................