2101 tests-su_08 - 1 Exam 1 I(7 pts Questions on...

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Exam 1
I. (7 pts.)
Questions on Illustrative Financial Statement Extracts
1. Refer to Lockheed Martin Corporation on page 14. What was the gross margin for 2005?
$__________________
2. Refer to Papa John’s International on page 22. Prepare the adjusti ng journal entry that would
have been made for the Utilities item at 12/25/2005:
3. Refer to Kellogg Company on page 42. If the company had 500,000 shares of stock outstanding
(i.e., owned by shareholders) in 2005, determine its total net income for 2005:
$ ____________________
II. (4 pts.)
You have been asked by Samson Co. to determine the value of the ending inventory as of 12/31/08.
Use the following codes to indicate whether or not the item should be included by Samson in its
ending inventory:
I--include in inventory
D--do not include in inventory
___ 1.Goods in transit on 12/31/08, from a supplier, with terms FOB destination, amounted to
$400. These goods had not arrived as of 12/31/08.
___ 2.On 12/31/08, goods in transit to customers, with terms FOB shipping point, amounted to
$900 (expected delivery date of 1/10/09).
___ 3.Samson Co. received notice from a supplier that goods ordered before year-end had been
delivered to the transportation company on 12/27/08. The terms were FOB shipping point. The
shipment had not arrived by 12/31/08.
___ 4. On 12/31/08, Samson shipped $780 worth of goods to a customer, FOB destination. The
goods are expected to arrive at destination no earlier than 1/8/09.
III. (3 pts.)
Suppose that an advance from a customer was recorded on 2/15/08 by crediting Revenues
for $4,000. By 12/31, only $3,800 of the revenues has been earned. Prepare the necessary
adjusting entry on 12/31/08.

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IV. (8 pts.)
Using the following 12/31/08 adjusted trial balance of Whoop-D-Doo Co., prepare the
necessary closing entries.
Debits Credits
Prepaid rent $1,800
Accounts receivable 23,000
Land 3,000
Retained earnings, 1/1/08 $38,220
Supplies 7,000
Rent expense 3,000
Income taxes expense 2,420
Dividends 1,000
Accumulated depreciation 4,400
Cash 15,000
Sales 18,000
Capital stock 10,000
Accounts payable 7,000
Equipment 26,000
Depreciation expense 4,000
Notes payable 8,600
$86,220 $86,220

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V. (3 pts.)
The following information is given for 2008:
Prepaid insurance -- beginning balance $2,900
Insurance expense for the period 10,800
Prepaid insurance -- ending balance 3,500
Cash payments of insurance premiums during 2008 amounted to: $ ______________
VI. (7 pts.)
McKinnon Consulting Services opened for business in November 2008. From the opening until the end of
the year, they engaged in the activities described below. Based on this information, prepare a trial balance.
1) Sold 26,000 shares of capital stock for $2.00 per share.
2) Purchased office equipment for $23,000 cash.
3) Received $94,000 from clients for services provided.
4) Paid office rent of $12,000.
5) Paid salaries of $50,000.
6) Borrowed $25,000 from a bank on a two-year note payable.
VII. (6 pts.)
Financial information is presented below for Meatloaf Corporation:
Operating Expenses $ 55,000
Sales Returns and Allowances 13,000
Sales Discounts 6,000
Sales 160,000
Costs of Goods Sold 77,000
1) Net sales = $ ________________
2) Gross Profit = $ _________________

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VIII. (10 pts.)
Provide the necessary journal entry for each of the following transactions of Fitzroy Co. If
no entry is required, write "no entry."
April 11: Obtained a $70,000 cash loan by issuing a one-year, 12% note to the bank.