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AIS100_Practice_Exam_1_Solutions

AIS100_Practice_Exam_1_Solutions - AIS 100 Practice Exam 1...

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AIS 100 Practice Exam 1 – Answer Key I. Multiple Choice 1 C 2 A 3 A 4 B 5 A 6 B 7 A 8 B 9 D 10 B 11 A 12 D 13 D 14 B 15 B 16 D 17 B 18 C 19 C 20 C 21 C 22 A 23 D 24 D 25 C II. Introduction to Financial Statements A. (1) 112,500 (2) 133,000 (3) 51,000 B. (4) 1.76 (5) 0.44
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III. Multiple Step Income Statement Zimmerman Zithers Income Statement For the Year Ended December 31, 2005 Sales ...................................................................... $575,000 Less: Sales Returns and Allowances ................................ $ 50,000 Sales Discounts ....................................................... 9,500 59,500 Net Sales ...................................................................... 515,500 Cost of Goods Sold .............................................................. 347,000 Gross Profit ...................................................................... 168,500 Operating Expenses Store Salaries Expense .................................................. $ 74,000 Utilities Expense ............................................................. 18,000 Advertising Expense ....................................................... 15,000 Depreciation Expense ................................................... 3,500 Freight-out ...................................................................... 2,000 Total Operating Expenses ........................................ 112,500 Income from Operations ....................................................... 56,000 Other Revenues and Gains Interest Revenue ............................................................ 25,000 Other Expenses and Losses Interest Expense ............................................................ 19,000 6,000 Net Income ...................................................................... $ 62,000 IV. Journal Entries 1. Cash ................................................................................................. 35,000 Common Stock .................................................................... 35,000 2. Equipment ........................................................................................... 50,000 Cash ..................................................................................... 15,000 Note Payable ..................................................................... 35,000 3. Rent Expense ..................................................................................... 3,000 Cash ..................................................................................... 3,000 4. Accounts Receivable ..........................................................................
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