Mgmt 200 Fall 2008 Exam 1 solution

Mgmt 200 Fall 2008 Exam 1 solution - Name: _ PUID: _ Purdue...

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Name: ________________________ PUID: ________________________ Purdue University Krannert School of Management MGMT 200 – Introductory Financial Accounting Fall 2008 Exam 1 – October 7, 2008 – SOLUTION OUTLINE This exam consists of 4 questions on 13 pages (excluding this cover page) for a total of 100 points. Time allowed: 90 minutes. Answer all questions. To ensure full credit and to maximize partial credit, clearly show all supporting calculations. The exam is closed book. A calculator is permitted. GOOD LUCK . Question 1 (25 points) ________ Question 2 (25 points) ________ Question 3 (25 points) ________ Question 4 (25 points) ________ TOTAL (100 points) ________
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Question 1. Journal entries and ledger accounts (25 points) Muncie Glass Corporation (MGC) has been in business for several years. It has six stores in central Indiana and sells a wide variety of imported and local fired glass products. Required: a. Prepare the journal entry (entries) for each of the following transactions that occurred during 2007. 1. MGC purchased land and building for a seventh store for $360,000 on March 1, 2007. LUND paid $60,000 cash and signed a ten-year note for the balance of the purchase price. The land was valued at $200,000 and the building at $160,000. Land 200,000 Building 160,000 Cash 60,000 Note payable 300,000 2. MGC purchased new store equipment for $58,000 cash. Store Equipment 58,000 Cash 58,000 3. MGC purchased new inventory from various suppliers for $92,000. All purchases were on credit with terms ranging from 30 to 60 days. Inventory 92,000 Accounts payable 92,000 4. Sales for 2007 totaled $320,000. Of this amount $170,000 was for cash sales and the remainder was on account. Cash 170,000 Accounts receivable 150,000 Sales revenue 320,000 Question 1 continued over . . . Mgmt 200 – Exam 1 – Fall 2008 – page 1
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5. The items sold in transaction 4 had cost MGC $105,000 to acquire. Cost of goods sold 105,000 Inventory 105,000 6. MGC collected $142,000 from their credit account customers. Cash 142,000 Accounts receivable 142,000 7. During 2007 MGC paid $88,000 to suppliers for inventory previously purchased on account. Accounts payable 88,000 Cash 88,000 8. MGC incurred operating expenses of $37,000 during 2007. $26,000 was paid in cash, $5,000 was prepaid in 2006, and the remaining $6,000 will be paid in January 2008. Operating expenses 37,000 Prepaid expenses 5,000 Cash 26,000 Expenses payable 6,000 9. MGC received an advance payment of $12,000 cash from a customer for a special order to be completed and shipped to the customer in February 2008. The full price of the order is $32,000 and the balance is due on delivery. Cash 12,000 Revenue received in advance 12,000 Question 1 continued over . . . Mgmt 200 – Exam 1 – Fall 2008 – page 2
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This note was uploaded on 01/29/2010 for the course MGMT 201 taught by Professor Rowe during the Spring '08 term at Purdue University-West Lafayette.

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Mgmt 200 Fall 2008 Exam 1 solution - Name: _ PUID: _ Purdue...

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