TIMED QUESTIONS SOLUTION

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 1 - Bank Reconciliation – 20 min

Required:

(1) Prepare a bank reconciliation at June 30, 2017. Assume that any errors made were by the bookkeeper.
Cheque #887 was for office supplies; the NSF cheque was that of customer Clark Tent, deposited in May,
and the payment is in regards to a note payable.
(2) Prepare the required adjusting entries. Work space provided on the following page……..

This review does not represent your final exam, and does not replace studying your notes/handouts.
Bank Reconciliation Workspace

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 2- AFDA- 15 Minutes

Required
Prepare the following journal entries:
a. Adjust the allowance for doubtful accounts on December 31, 2016. The bookkeeper has
determined the ending AFDA should be $12,430. There is currently a $1,640 debit balance in
the account.
b. On March 1, 2017 it is determined that K. Haley will be unable to pay his account in the
amount of $2,640.
c. Use the following information to adjust the allowance for doubtful accounts at December 31,
2017.

Date Account DR CR
Dec 31.2016 Bad debt expense 14,070
Allowance for Doubtful accounts 14,070

March 1, 2017 Allowance for Doubtful accounts 2,640

Accounts Receivable – K. Haley 2,640

Dec 31. 2017 Bad debt expense 6,040

Allowance for Doubtful accounts 6,040

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 3-Depreciation- 15 Minutes

Part 1
Amber Co. purchases computer equipment for $82,000 on September 29, 2016 and expects
this equipment to have a useful life of 4 years and a residual value of $12,000. They have a
policy of using the nearest whole month in the year of purchase.
Required: Determine the depreciation expense for each of the years below, using the double
declining balance method.

Part 2
Hudson Co. sells a building on December 1, 2016. The accounts showed adjusted balances on
November 30, 2106, as follows:
Building…………………………………………$512,000
Accumulated depreciation, Building…………$210,000
Required: Record the sale of the building assuming the cash proceeds were:
a. $363,000
b. $252,000

Date Account DR CR
Dec 1.16 Cash 363,000
Accumulated Depreciation – Building 210,000
Building 512,000
Gain on sale of building 62,000

Dec 1.16 Loss on sale of building 50,000

Cash 252,000
Accumulated Depreciation – Building 210,000
Building 512,000

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 4-Journal Entries- 15 Minutes

June 1 Accounts Receivable – Avery & Wiest ....................... 9,500

Sales ...................................................................... 9,500
To record sales; terms 2/5, n/15, FOB destination.

1 Cost of Goods Sold ..................................................... 6,650

Merchandise Inventory......................................... 6,650
To record cost of sales.

2 Merchandise Inventory ............................................... 4,900

Accounts Payable – Angolac Suppliers .............. 4,900
To record purchase of merchandise; terms 1/10,
n20, FOB shipping point.

4 Merchandise Inventory ............................................... 11,400

Accounts Payable – Bastille Sales ...................... 11,400
To record purchase of merchandise; terms 1/15,
n/45, FOB Bastille Sales.

5 Accounts Receivable – Gelgar ................................... 11,000

Sales ...................................................................... 11,000
To record sales; terms 2/5, n/15, FOB destination.

5 Cost of Goods Sold ..................................................... 7,700

Merchandise Inventory......................................... 7,700
To record cost of sales.

6 Cash ............................................................................. 9,310

Sales Discounts........................................................... 190
Accounts Receivable – Avery & Wiest ................ 9,500

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 4-Journal Entries- 15 Minutes

To record collection within discount period;

$9,500 x 2% = $190 discount.

12 Accounts Payable – Angolac Suppliers..................... 4,900

Cash ...................................................................... 4,851
Merchandise Inventory......................................... 49
To record payment within discount period;
$4,900 x 1% = $49 discount.
June 20 Cash ............................................................................. 11,000
Accounts Receivable – Gelgar ............................ 11,000
To record collection.

30 Accounts Payable – Bastille Sales ............................. 11,400

Cash ...................................................................... 11,400
To record payment.

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 5- Financial Statement- 30 Minutes

Below is Danduro Co. adjusted trail balance in alphabetic order for the year ended June 30, 2016.

Danduro Co.
Adjusted Trial Balance
As at June 30, 2016
Account Title Debit Credit
Accounts Payable $8,900
Accounts Receivable $6,100
Accumulated Depreciation- Equipment 1,200
Bank Loan (See Note 1) 21,000
Cash 19,000
Cost of Goods Sold 13,500
Depreciation Expense 700
Danduro, Capital (See Note 2) 34,470
Danduro, Withdrawals 3,500
Equipment 25,000
Insurance Expense 600
Interest Expense 120
Interest Revenue 280
Inventory 18,000
Maintenance Expense 590
Prepaid Insurance 3,250
Professional Fees Expense 260
Rent Expense 1,000
Salaries Expense 2,500
Sales Discounts 1,100
Sales Returns and Allowances 840
Sales 30,000
Telephone Expense 90
Travel Expense 1,400
Unearned Revenue 1,700
Total $97,550 $97,550
Note 1: The bank loan is payable over 5 years and principal of $4,200 will be paid by June 30, 2017.
Note 2: This is the first year of operations for Danduro.
Required:
a) Prepare a multistep income statement for the year ended June 30, 2016.
b) Prepare the statement of changes in equity at June 30, 2016.
c) Prepare a Classified Balance Sheet at June 30, 2016.

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 5- Financial Statement- 30 Minutes

Danduro Co.
Income Statement
For the Year Ended June 30, 2016
Sales $30,000
Less Sales Discounts (1,100)
Less Sales Returns and Allowances (840)
Net Sales 28,060
Less Cost of Goods Sold (13,500)
Gross Profit 14,560

Operating Expenses
Insurance Expense $600
Maintenance Expense 590
Rent Expense 1,000
Professional Fees Expense 260
Salaries Expense 2,500
Telephone Expense 90
Travel Expense 1,400
Depreciation Expense 700
Total Operating Expenses (7,140)
Operating Income 7,420
Other Revenue and Expenses
Interest Revenue 280
Interest Expense (120) 160

Profit $7,580

b)
Danduro Co.
Statement of Changes in Equity
For the year ended June 30, 2016

Danduro Capital, July 1, 2015 $34,470

Add: Profit 7,580
Less: Danduro Withdrawals (3,500)
Danduro Capital, June 30, 2016 $38,550

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 5- Financial Statement- 30 Minutes

Danduro Co.

Balance Sheet

As at June 30, 2016

Assets
Current Assets
Cash $19,000
Accounts Receivable 6,100
Prepaid Insurance 3,250
Inventory 18,000
Total Current Assets $46,350
Property, Plant and Equipment
Equipment 25,000
Less: Accumulated Depreciation-
Equipment (1,200)
Total Property, Plant and
Equipment 23,800
Total Assets $70,150

Liabilities
Current Liabilities
Accounts Payable 8,900
Unearned Revenue 1,700
Bank Loan - Current Portion 4,200
Total Current Liabilities $14,800
Non-Current Liabilities
Bank Loan - Non-Current Portion 16,800
Total Non-Current Liabilities 16,800
Total Liabilities 31,600

Equity
Danduro Capital, June 30, 2016 38,550
Total Liabilities and Equity $70,150

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 6- Notes Receivable- 15 minutes

Assume a 6 month, 10% Note Receivable for $10,000 is signed in exchange for a customer’s
overdue Accounts Receivable balance and recorded in the books on October 1, 2018. The
company has a December 31 year end.
Record the entry on the date the note was signed

Journal
Date Account Title & Explanation Debit Credit
October 1, 2018 Notes Receivable 10,000
AR 10,000

Give the journal entry to record accrued interest on December 31, 2018.

Journal
Date Account Title & Explanation Debit Credit
Dec 31, 2018 Interest Receivable 250
Interest Revenue 250
Calculation: $10,000*10%*3/12
Record the receipt of the principal plus interest at maturity (April 1, 2019).

Journal
Date Account Title & Explanation Debit Credit
April 1, 2019 Cash 10,500
Interest Receivable 250
Interest Revenue 250
Note Receivable 10,000
Calculation: Interest Revenue = $10,000*10%*3/12

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 7 – FIFO/MWA

Graphic Artz Co. uses a perpetual inventory system and had the following beginning inventory
and purchases during January 2017:
Item X
Date Units Unit Cost Total Cost
Jan. 1 Inventory ............................. 300 @ $14 = $ 4,200
16 Purchase .............................. 200 @ 15 = 3,000
20 Purchase .............................. 300 @ 16 = 4,800

Sales of units were as follows (all on credit):

Jan. 15 .............................. 200 units at $30
28 .............................. 460 units at $35
Total units sold ...................... 660

Calculate the ending inventory and the cost of goods sold under a perpetual inventory system
by applying each of the three different methods of inventory costing:
a. FIFO
b. Moving weighted average

This review does not represent your final exam, and does not replace studying your notes/handouts.
Question 7 – FIFO/MWA

This review does not represent your final exam, and does not replace studying your notes/handouts.