closing entries questions.pdf - Granite Bay Jet Ski...

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Unformatted text preview: Granite Bay Jet Ski, Incorporated Level II 5’” Edition Adjusting Entries and Closing Entries for the Quarter Ended June 30 and the Final Project Evaluation Page 1 Granite Bay Jet Ski, Inc., Level II — Module 5 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 ADJUSTING ENTRIES FOR THE QUARTER Using a copy of the June 30 Unadjusted Trial Balance (printed after the bank reconciliation entries) and the information and financial data shown below, record the adjusting entries for Granite Bay Jet Ski, Inc. Be sure to select the Adjusting JE button to journalize the adjusting entries. Adjusting entries must NOT be entered using the daily entries (Daily JE) procedure. Corrections to adjusting entries must also be entered using the adjusting entries selection. Where necessary, round all calculations to the nearest cent. ALL ENTRIES MUST BE RECORDED AS OF JUNE 30, THE END OF THE SECOND QUARTER! A. The unexpired insurance balance is $3,780. B. The ending store and shop supplies inventory is $2,135. C. A total of $985 worth of advertising copy, paid for in advance and correctly charged to the Advertising Expense account, will be received early next quarter. D. All of the prepaid property tax is an expense for the quarter. E. Wages accrued total 8.5 hours worked at $11.30 per hour. F. Storage Fees Earned for the quarter total $10,450. G. Straight-line depreciation of store equipment and fixtures totals $2,250 for the quarter. The new store equipment acquired June 26 will not be depreciated this quarter. H. Depreciation of shop equipment is $460 per month. The new shop equipment acquired during the final week of June will not be depreciated for the second quarter. Page 2 Granite Bay Jet Ski, Inc., Level II — Module 5 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 Granite Bay Jet Ski, Inc., has three trucks. The new truck acquired on June 21 will not be depreciated this quarter. An old truck used only for short distance heavy hauling is fillly depreciated. The third truck was acquired at a cost of $25,500, has a salvage value of $7,500, is depreciated on a miles driven basis (units of production depreciation), and has an estimated service life of 120,000 miles. The truck was driven 2,240 miles during the quarter. Accrue the interest on the short-term notes receivable. Calculate the interest to the nearest cent. Use the 360-day banker's year for all interest computations and record a single adjusting entry for the short-term interest. Note Receivable: $10,000, 8.5%, 60-day note, dated June 22 Additional income taxes expense for the period total $2,640. Credit Card Expense (3.0%) on the outstanding balance of the Accounts Receivable, Credit Card Companies account balance has not been recorded. This accrual entry will decrease the Accounts Receivable, Credit Card Companies account. . The balance sheet (computer aging) method is used to estimate the balance of the Allowance for Doubtfi11 Accounts account for the end of each quarter. The program has analyzed all accounts receivable and calculated the estimated balance of the account to be $2,190.50. In the past, Granite Bay Jet Ski, Incorporated, has experienced small shortages (shrinkage) in merchandise inventory when the perpetual inventory total maintained on the computerized accounting system was compared to the actual physical inventory count taken at the end of the accounting period. When this shrinkage occurred, the Cost of Goods Sold account was debited and the Merchandise Inventory account was credited for the total value of the inventory shortage. The entry was followed by an update of the specific merchandise items where the quantities reported were not correct. At the end of the current quarter the physical count of merchandise on hand matches the perpetual inventory for each item in stock. As a result of the satisfactory inventory control system that is in place, no losses have occurred and no adjusting entry for inventory shrinkage is required this quarter. Page 3 Granite Bay Jet Ski, Inc., Level II — Module 5 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 When all of the adjusting entries have been correctly entered, PRINT THE ADJUSTED TRIAL BALANCE! The correct balance will be $754,525.73. You are now ready to complete the final evaluation of the Granite Bay Jet Ski, Inc., operations. To gather the necessary information to complete the final evaluation questions, PRINT ALL of the documents listed in instructions 1-9. 1. Click on Journals/Ledgers/Statements, select Financial Statements, then select Income Statement. Print the Income Statement. 2. Click on Journals/Ledgers/Statements, select Financial Statements, then select Retained Earnings. Print the Retained Earnings Statement. 3. Click on Journals/Ledgers/Statements, select Financial Statements, then select Balance sheet. Print the Balance Sheet. THE CORRECT NET INCOME FOR GRANITE BAY JET SKI, INCORPORATED, IS BETWEEN $46,900.00 AND $47,000.00 4. Print the Schedule of Accounts Receivable. 5. Print all customer accounts. 6. Print the Schedule of Accounts Payable. 7. Print all vendor accounts 8. Print the Inventory Analysis. 9. Print the following inventory stock cards: A1100 A900T AL800 AU150 KW001 KW003 Page 4 Granite Bay Jet Ski, Inc., Level II — Module 5 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 RECORD TI-IE CLOSING ENTRIES FOR GRANITE BAY JET SKI The closing entry process in the Granite Bay Jet Ski, Inc., accounting system is an automatic function. When initiated, the program will close all of the temporary accounts. Continue with instructions 10, 11, and 12. 10. Click on Data Entry. Click on Close JE. The program will automatically record (journalize) and post the closing entries to the General Ledger. When the closing is completed answer OK. 11. Print the Post-Closing Trial Balance. 12. Print the following General Ledger accounts: 101 Cash 105 Accounts Receivable 115 Merchandise Inventory 201 Accounts Payable 305 Retained Earnings 401 Watercraft and Accessory Sales 411 Service Fees Earned 602 Store and Shop Supplies Expense Exit the Granite Bay Jet Ski, Inc., accounting program. Using all of your printed documents, carefiilly answer the Final Evaluation questions. The questions and several of the end-of-the— quarter documents may be collected by your instructor. Error Correction After Closing the Books If, after closing the books, you discover an error or wish to print a corrected copy of any of the financial statements, you may return to the Adjusted Trial Balance totals. Click on Support, select Restore to Adjusted Balances. The accounts will be returned to their pre-closing balances. Daily or adjusting entries can then be corrected using the Daily JE or Adjusting JE option. NEW COPIES OF ALL CORRECTED DOCUMENTS MUST BE PRINTED. Again, close the General Ledger (Close JE) and print a Post-Closing Trial Balance. Then exit the program. Page 5 Granite Bay Jet Ski, Inc., Level II — Module 5 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 FINAL EVALUATION NAME GRANITE BAY JET SKI II CLASS DAY AND TIME 1. What is the net realizable value of the Accounts Receivable? 2. On the June 30, Balance Sheet, what is the "net worth" or "net assets" of the business? 3. What is the book value of Shop Equipment? 4. What is the current ratio for Granite Bay Jet Ski, Incorporated? A. 10.56 B. 11.01 C. 11.41 D. 11.91 E. None of the above 5. What is the acid test (quick) ratio of the business? A. 4.56 B. 5.01 C. 5.08 D. 5.13 E. None of the above 6. Does Granite Bay Jet Ski have enough cash on hand to meet current debt? Answer Y for Yes or N for No. 7. Identify by customer number, the customer who has the smallest outstanding balance on June 30? 8. Does any customer currently have a balance that is past due? Granite Bay Jet Ski, Incorporated, extends net 30 terms to all customers. Answer Y for Yes or N for No. 9. Examine the Royal Bar J etters account. On or before what date should the balance of invoice G3971 be received? . June 16 July 17 . July 18 . July 19 None of the above punp> Page 6 Granite Bay Jet Ski, Inc., Level II — Module 5 $ $ DATE 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 FINAL PROJECT EVALUATION GRANITE BAY JET SKI II 10. What was the balance owed to Andregg Supply before the return of $ $38.90 worth of supplies on June 23? 11. If paid on time, identify by invoice number the invoice that must be paid no later than July 3. 12. If the Kawasaki USA account is not paid in fiill within the discount $ period for the single outstanding invoice, what will be the total amount of the discount lost? 13. The single unit of inventory item AL800, that was sold for cash on June 16, was listed on what sales invoice? (Identify by number.) 14. What is the FIFO inventory value of the AL800 trailers in stock? $ 15. How many KW001 units were sold during June? 16. How many KW001 units were returned during June? 17. How many Granite Bay T-shirts are in stock? 18. How many A1100 Jet Ski STX-15F units were purchased during June? 19. How many individual inventory items are now out of stock? A. 0 wow UIUJN E. None of the above 20. If the transportation-in costs had been reduced to zero through more $ successful negotiation of merchandise contracts, what would be the new Gross Profit on Sales? 21. Total Cost of Goods Sold is what percent of Net Sales? . 73.69% 74.15% . 75.86% . 76.45% None of the above auop> Page 7 Granite Bay Jet Ski, Inc., Level II — Module 5 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 FINAL PROJECT EVALUATION GRANITE BAY JET SKI II 22. 23. 24. 25. 26. 27. Gross Profit from Sales is what percent of Net Sales? . 25.09% 26.3 1 % 27.54% . 28.55% None of the above edow> Income From Operations is what percent of Total Net Revenues (Net Sales and Total Fees Earned)? A. 8.89% B. 11.67% C. 14.70% D. 17.65% E. None of the above Sales Return and Allowances is what percent of Watercraft and Accessory Sales? A. Less than .5% B. .5% C. .74% D. 2.00% E. None of the above Last quarter the Total Selling Expenses were 7.75% of Total Net Sales and Fees Earned. Has this quarter, ending June 30, 2008, been an improvement over last quarter? Answer Y for Yes or N for No. Compared to June 2 merchandise inventory of $187,164.42, the June 30 merchandise inventory has decreased by what percent? A. 5.17% B. 6.99% C. 7.28% D. 8.46% E. None of the above If the total for Service Fees Earned and Storage Fees Earned could be $ increased by 25% with only a $450 increase in Salaries and Wages Expense, and a $150 increase in Advertising Expense, what would be the new total for Income From Operations? Page 8 Granite Bay Jet Ski, Inc., Level II — Module 5 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 % FINAL PROJECT EVALUATION GRANITE BAY JET SKI II 28. A 1% increase in Net Sales and Fees Earned combined with a 1% $ decrease in Total Operating Expenses, would result in an increase to Income From Operations to what amount? 29. If $800 of Delivery Expense charges were found to be recorded in the $ Transportation In account, the Cost of Goods Sold and Gross Profit would change by $800. If this error was corrected, what would be the balance of the Net Income? 30. If an audit determined that due to "shrinkage" the ending inventory was overstated by $1,500, the reported Net Income of the business would be: A. Understated B. Overstated C. Unchanged D. None of the above 31. If "shrinkage" of $1,000 was reported after the inventory was officially counted on June 30, 2008, the Merchandise Inventory account would be credited for the $1,000. The missing inventory item/s would be accounted for in the entry and the perpetual inventory system would be brought up—to-date. In the journal entry, what account would be debited for the shrinkage? . Cash Cost of Goods Sold Income Summary Merchandise Inventory None of the above eye?» 32. If the ending inventory is understated, the Income from Operations will be: A. Overstated B. Understated C. Unchanged D. None of the above Page 9 Granite Bay Jet Ski, Inc., Level II — Module 5 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 FINAL PROJECT EVALUATION GRANITE BAY JET SKI II 33. After closing the books, what is the balance of Dividends Declared? A. $2,400 B. $400 C. $0 D. None of the above 34. What must be the last account listed on the Granite Bay Jet Ski, Inc., Post-Closing Trial Balance? Income Summary Common Stock Dividends Declared Merchandise Inventory None of the above 5.5.0.“? 35. After closing, what is the balance of the Income Summary account? A. $225,000.00 B. $467,907.03 C. $439,390.14 D. $46,965.29 E. None of the above Page 10 Granite Bay Jet Ski, Inc., Level II — Module 5 5th Edition, Copyright © 2010 PKL Software, Incorporated. All rights reserved. Last Revised: February 16, 2013 ...
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