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THE 2020 SPRING ACCOUNTING TRIBE Practice Exam For Fall 2020

Name ______________

Problem 1, S&J Baby Carriages, Inc

Listed below are the accounts and their respective balances for S&J Baby Carriages, Inc.

(S&J, Inc.) at December 31, 2019:

Cash $ 170,000

Accounts Receivable 44,000

Inventory (500 Carriages @ $ 200 each) 100,000

Equipment 220,000

Accumulated Depreciation 80,000

Security Deposit 5,000

Accounts Payable 23,000

Taxes Payable 10,000

Wages Payable 12,000

Rent Payable 1,000

Note Payable 150,000

Common Stock (200 shares) 70,000

Retained Earnings 193,000

During 2020 the following transactions occurred:

Paid prior year’s accounts payable.

Received prior year’s accounts receivable.

Purchased 1,000 Carriages at $240 each. Paid 80% down and will pay the rest later.

Sold 800 Carriages for $420 each with 70% down (cash) and the other 30% will get later.

Paid 2019 taxes payable.

Paid cash for wages of $60,000.

Paid fourteen months’ rent, $14,000. (Be careful!)

Paid $4,000 for advertising for 2020.

Sold 5 shares of common stock for $3,500 each on September 30, 2020.

Paid utility bill for 2020, $2,000.

On Dec 31, paid annual payment on note payable of $10,000 principal plus 9,000

interest.

Paid a $5,000 dividend to shareholders on December 31, 2020.

Also, during the year the company paid 50% of the 2020 taxes. They will pay the rest next year. The tax rate is 30%.

The company uses the FIFO inventory system.

At Dec 31, 2020, the company owed $10,000 in wages which had not yet been paid.

The equipment originally cost $220,000, had a twenty-year life and was expected to be worth $20,000 at the end.

Other adjustments?

Prepare Journal Entries and T-Accounts on the pages provided in the exam for 2020

Answer questions 16-22 using the information from your T accounts

Prepare Journal Entries for S&J, Inc. for 2020.

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Journal Entries, pg 2

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Journal Entries, pg 3

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Post the T-accounts for S&J, Inc. for 2020.

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Multiple Choice. Please mark your answer on the bubble sheet and on this test. (6 points each)

1) Which of these is not included as a separate item in The accounting equation:

A) Assets

B) Liabilities

C) Revenues

D) Owners’ Equity

E) These are all included in the accounting equation

2) Bella wants to have $1,000,000 in the bank in ten years. If the bank pays interest at 6% compounded semi-annually, how much does she need to deposit today to reach her goal?

A) $ 558,394.78

B) $ 311,804.73

C) $ 553,675.75

D) $ 456,386.95

E) Some other number

3) If Ann puts $1,000 in the bank today and the bank pays interest at 8% compounded quarterly, how much will she have in three years?

A) $ 1,259.71

B) $ 2,518.17

C) $ 1,268.24

D) $ 1,061.21

E) Some other number

4) Which account will NEVER be included in a closing journal entry?

A) Sales

B) Retained Earnings

C) Dividends

D) Wage Expense

E) Advertising Expense

5) Tommy Company had 10,000 shares of common stock outstanding on January 1, 2020. Tommy Company sold 4,000 shares on July 1, 2020 and sold 4,000 more shares on October 1, 2020. If they earned $500,000, the EPS for 2020 would be:

A) $ 22.73

B) $ 50.00

C) $ 38.46

D) $ 27.78

E) Some other amount

Skip 6

6) If Savannah wants to have $8,000 in the bank in five years and the bank pays interest at 4% compounded semi-annually, how much does she need to put in the bank today?

A) $ 6,575.42

B) $ 5,404.51

C) $ 5,845.52

D) $ 6,562.79

E) Some other number

7) For Kylie’s Company, the beginning inventory was $2,000,000 and the ending inventory

was $1,000,000. During the year she had operating expenses of $600,000, Sales of $20,000,000

and a cost of goods sold of $5,000,000. For the year, Kylie’s Inventory turn was:

A) 1.86

B) 3.33

C) 3.00

D) 2.70

E) cannot determine from information given or some other number

8) In the closing entry, the credit to retained earnings is the same amount as:

A) the net income for the year

B) the dividends

C) the beginning retained earnings balance less the dividends

D) the total of all the expenses for the year

E) the total assets less the total liabilities

9) Current Liabilities are:

A) Liabilities that are due now or even overdue for payment

B) Liabilities that will have to be paid within one year

C) Equal to long-term liabilities - Owners' Equity

D) Equal to Current Assets - Expenses for the period

E) By definition: “Bad Things”

10) Which of the following changes describes the payment of $5,000 cash in settlement of an accounts payable?

A) Assets and owners' equity increase by $5,000

B) Assets and owners' equity decrease by $5,000

C) Assets and liabilities increase by $5,000

D) Assets and liabilities decrease by $5,000

E) No changes in total assets, liabilities, nor owners' equity

Skip 11) Kyle wants to have $1,000 in the bank in 50 years. If the bank pays interest at 8% compounded semi-annually, how much does she need to deposit today to reach her goal?

A) $ 19.80

B) $ 371.53

C) $ 20.00

D) $ 21.32

E) Some other number

NO12) If beginning Rent Payable is $6,000 and the Company paid 9 months’ rent of $9,000

($1,000 per month) the ending financial statements would include

A) Rent Payable of $15,000

B) Rent Payable of $ 9,000

C) Prepaid Rent of $ 4,000

D) Prepaid Rent of $ 5,000.

E) None of the above

13) If a company sells its oldest inventory first, the inventory method is called the

A) LIFO method

B) weight average method

C) FIFO method

D) specific identification method

E) none of these

14) On January 1, 2020 Burden company purchased a new piece of equipment for $44,000. They estimate that the equipment will last about 10 years and then be worth $4,000. The depreciation expense for 2022 (the third year) would be:

A) $ 4,000

B) $ 2,000

C) $12,000

D) $ 6,000

E) Some other number

15) For the equipment in problem 14, the accumulated depreciation account at the end of 2022 (the third year) would have a balance of:

A) $ 6,000

B) $ 900

C) $ 12,000

D) $ 18,000

E) Some other number

Answer questions 16 - 22 using your entries and balances calculated for

Problem 1: S&J, Inc. for 2020.

16) Operating income (income from Operations) is:

A) $112,000

B) $ 117,000

C) $ 400,000

D) $ 78,000

E) Some other number

17) Cost of Goods Sold for 2020 is

A) $ 200,000

B) $ 172,000

C) $ 220,000

D) $ 225,000

E) Some other number

18) Depreciation Expense for 2020 is

A) $ 10,000

B) $ 9,000

C) $ 11,000

D) $ 15,000

E) None of the above

skip19) Prepaid Rent at 12/31/20 is

A) $ -0-

B) $ 4,000

C) $ 6,000

D) $ 1,000

E) None of the above

20) Accounts Payable at 12/31/20 is

A) $ 48,000

B) $ 96,000

C) $ 58,000

D) $ 61,000

E) None of the above

21) Wage Expense for 2020 is

A) $ 48,000

B) $ 58,000

C) $ 70,000

D) $ 60,000

E) None of the above

22) Accounts Receivable at 12/31/20 is

A) $ 120,000

B) $ 83,000

C) $ 100,800

D) $ 140,800

E) None of the above

Answer questions 23 - 32 using the financial information from Problem 2:

Brynny’s, Inc. at December 31, 2020. (Brynny’s is at end of this test)

23) The Total Current Liabilities at December 31, 2020 was

A) $ 97,000

B) $ 137,000

C) $ 107,000

D) $ 117,000

E) Some other number

24) The Total Liabilities at December 31, 2020 was

A) $ 137,000

B) $ 97,000

C) $ 496,000

D) $ 147,000

E) Some other number

25) The Total Owners’ Equity at December 31, 2020 was

A) $ 139,000

B) $ 210,000

C) $ 349,000

D) $ 359,000

E) Some other number

26) The Gross Margin (Gross Profit) for the year ended December 31, 2020 was

A) $ 400,000

B) $ 370,000

C) $ 117,000

D) $ 112,000

E) Some other number

27) The Operating Income for the year ended at December 31, 2020 was

A) $ 112,000

B) $ 117,000

C) $ 283,000

D) $ 83,000

E) Some other number

28) The Total Current Assets at December 31, 2020 was

A) $ 297,000

B) $ 301,000

C) $ 267,000

D) $ 91,000

E) Some other number

29) The Dividends Declared during 2020 were

A) $ 10,000

B) $ 15,000

C) $ -0-

D) $ 13,000

E) Some other number

30) The Earnings Per Share for 2020 was

A) $ 8.94

B) $ 11.00

C) $ 8.80

D) $ 9.43

E) Some other number

31) The Taxable Income (Income Before Taxes) for the year ended at December 31, 2020 was

A) $ 88,000

B) $ 80,000

C) $ 112,000

D) $ 117,000

E) Some other number

32) Total Assets at December 31, 2020 was

A) $ 496,000

B) $ 301,000

C) $ 185,000

D) $ 486,000

E) None of the above

33) Which of the following groups contains only assets?

A) Land, security deposit, cash

B) Accounts receivable, building, retained earnings

C) Accounts payable, notes payable, common stock

D) Equipment, sales revenue, inventory

E) Revenue, expenses, operating income

34) The matching concept is

A) Revenues = Cost of Goods Sold

B) Assets = Liabilities + Owners’ Equity

C) Debits = Credits

D) Recording all expenses incurred in generating the revenues of a period

E) Having the same number of asset accounts on the balance sheet as

last year.

Extra Credit

35) A person who is unctuous is

A) An extremely smart person

B) A person who is an unstoppable force

C) A slick and oily person

D) A person who subject to mood swings

E) A person who talks too much

Skip 36) You started the year with $1,000 in Prepaid Insurance. This was for six months of

Insurance on a policy that expires this year. On July 1, you purchased a three-year

policy for $12,000. How much will you have in Insurance Expense for this year?

A) $ 600

B) $ 3,600

C) $ 2,600

D) $ 3,000

E) 0

Problem 2 Brynny’s, Inc.

Listed below are the accounts for Brynny, Inc. at December 31, 2020 and their balances. The amounts listed for the Income Statement accounts are before the closing entry has been posted. The amounts for the Balance Sheet accounts are after the closing entry has been posted.

|Accounts Payable |$ 80,000 |

|Accounts Receivable | 150,000 |

|Accumulated Depreciation | 95,000 |

|Advertising Expense | 8,000 |

|Building | 100,000 |

|Cash | 75,000 |

|Common Stock | 210,000 |

|Cost of Goods Sold | 380,000 |

|Depreciation Expense | 24,000 |

|Equipment |120,000 |

|Interest Expense | 5,000 |

|Insurance Expense |3,000 |

|Inventory | 72,000 |

|Land | 60,000 |

|Note Payable | 50,000 |

|Prepaid Insurance |4,000 |

|Rent Expense | 36,000 |

|Retained Earnings | 139,000 |

|Sales | 780,000 |

|Salaries Payable | 13,000 |

|Salary Expense |200,000 |

|Security Deposit | 10,000 |

|Tax Expense | 24,000 |

|Taxes Payable | 4,000 |

|Utilities Expense | 12,000 |

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Brynn’s beginning balance in Retained Earnings was $61,000 and the beginning Common Stock balance was $70,000. The company had 7,000 shares of common stock outstanding at the beginning of the year. The corporation issued 4,000 shares of common stock on March 31st, 2020. The Note Payable requires annual payments of $10,000 on principal plus interest at 10% on December 31st.

Use the information above to answer questions 23 – 32 on the exam.

Hint: You might want to draft the financial statements on the back sides of your exam pages.

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