3A-SP'97-EX#2-KEY-PROB#1-AJEs

3A-SP'97-EX#2-KEY-PROB#1-AJEs - Econ 3A - Financial...

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Econ 3A - Financial Accounting - Sp'97 Exam # 2 - 100 points ANSWER KEY ANSWER KEY Problem 1 - Adjusting entries (30 points) Toys"R"UsToo, an owner-managed, single-store competitor of Toys"R"Us, is preparing its financial statements for the fiscal year ended January 31, 1997. The store's bookkeeper is good at posting basic entries but cannot handle adjusting entries. The owner heard that UCSB's Econ 3A students recently covered this topic and are also experts in retail accounting. Help Toys by preparing adjusting entries as of January 31, 1997 for the following items. a. Store fixtures costing $180,000 (purchased in 1995) have an estimated useful life of 12 years. The straight-line method is used. b. During the year plastic bags and other supplies were purchased for $29,000; the purchases were charged to Supplies Inventory. Inventory of supplies at the beginning of the year was $12,800. At year- end 1997 a physical count revealed $13,700 of supplies on hand. c.
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