Sample midterm 8

Sample midterm 8 - #31 We are Econ3a, Inc. We purchase...

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#31 We are Econ3a, Inc. . We purchase stuff and sell it for a profit. Here is our trial balance at 1/1/2008: DR/ (CR) Cash 70,000 Accounts receivable 25,000 Inventory 18,000 Prepaid expenses 400 Fixed assets 10,000 Accounts payable (22,000) Accrued payroll - Debt (55,000) Common stock (3,000) Retained earnings (43,400) - (1) (2) Purchased $50,000 of inventory, on credit (3) Sold goods for $70,000 on credit which cost $30,000 (4) Made a $500 payment on the debt ($300 for interest and $200 for principle) (5) Purchased inventory for $10,000 cash (not on account). (6) Collected $42,000 from customers. (7) Paid $52,000 to vendors against outstanding payables. (8) (9) (10) (11) BASED ON ALL OF THE ABOVE i. II. FOR THE INCOME STATEMENT, CHOOSE FROM THE FOLLOWING ACCOUNT TITLES Revenues Salaries expense Advertising expense Cost of Goods Sold (or COGS) Interest expense Consultant expenses Rent expense We had the following activity during January: On the last day of the month, paid $24,000 for consulting services NOT YET PERFORMED. Paid $12,000 for payroll. NOTE: ALL OF THE BALANCE SHEET ACCOUNT TITLES YOU MAY NEED ARE LISTED IN THE ABOVE TRIAL BALANCE. FOR EACH NUMBER (1-11) ABOVE, RECORD THE JOURNAL ENTY OR STATE NO ENTRY IF THERE IS NONE. TRACK ACTVITY IN WHATEVER MANNER YOU PREFER, AND SHOW THE BALANCE SHEET AS OF THE END OF THE MONTH AND THE INCOME STATEMENT FOR THE MONTH. Made no new bank borrowings, but the debt already on the trial balance above matures at $200/ month. Noticed that there was $1,000 of payroll for the last couple days of the month which has not been paid yet , but for which we have received the benefit from our employees. Paid $2,000 for advertising already completed.
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ACCOUNT DEBIT CREDIT (1) NO ENTRY (2) Inventory 50,000 Accounts payable 50,000 (3) Accounts receivable 70,000 Sales 70,000 (3a) COGS 30,000 Inventory 30,000 (4) Debt 200 Interest expense 300 Cash 500 (5) Inventory 10,000 Cash 10,000 (6) Cash 42,000 Accounts receivable 42,000 (7) Accounts payable 52,000 Cash 52,000 (8) Prepaid expenses 24,000 Cash 24,000 (9) Salaries expense 12,000 Cash 12,000 (10) Salaries expense 1,000 Accrued payroll 1,000 (11) Advertising expenses 2,000 Cash 2,000
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70,000 25,000 18,000 400 10,000 500 70,000 50,000 24,000 10,000 42,000 30,000 42,000 10,000 52,000 24,000 12,000 2,000 11,500 53,000 48,000 24,400 10,000 - 22,000 - 55,000 3,000 43,400 50,000 1,000 200 24,700 52,000 20,000 1,000 54,800 3,000 68,100 70,000 30,000 300 12,000 1,000 70,000 30,000 300 13,000 NET INCOME 24,700 2,000 - 2,000 - Fixed Assets Prepaid Expenses Rent Expense Advertising Exp. Common Stock Retained Earnings Accounts payable Accrued Payroll Sales Consult. Exp. Debt Salaries expense Cash Accounts Receiv. Inventory COGS Interest exp.
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Assets Sales 70,000 Current assets COGS 30,000 Cash 11,500 Gross Profit 40,000 Accounts receivable 53,000 Inventory 48,000 Interest expense 300 Prepaid expenses 24,400 Salaries expense 13,000 Total Current assets 136,900 Advertising expense 2,000 Operating expenses
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Sample midterm 8 - #31 We are Econ3a, Inc. We purchase...

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