Mgmt 200 Fall 2009 Exam 1 Solution

Mgmt 200 Fall 2009 Exam 1 Solution - First name:...

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Unformatted text preview: First name: ___________ Last name: ______________ PUID: ________________________ Purdue University Krannert School of Management MGMT 200 Introductory Financial Accounting Fall 2009 Exam 1 October 6, 2009 - SOLUTION 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 (27 points) ________ Question 2 (24 points) ________ Question 3 (25 points) ________ Question 4 (24 points) ________ TOTAL (100 points) ________ Question 1. Journal entries and ledger accounts (27 points) Rover Inc. has been in business for several years. It has three stores in central Indiana and sells a wide variety of pet food and pet toy products. Required: a. Prepare the journal entry (entries) for each of the following transactions that occurred during 2008. 1. Rover Inc. purchased a building for use as a fourth retail store for $565,000. The purchase price was allocated to land $210,000 and to building $355,000. Rover Inc paid $105,000 cash and signed a twenty-year note for the balance of the purchase price. Land 210,000 Building 355,000 Cash 105,000 Note payable 460,000 2. Rover Inc. purchased new inventory from various suppliers for $340,000. All purchases were on credit with terms ranging from 10 to 60 days. Inventory 340,000 Accounts payable 340,000 3. Sales for 2008 totaled $675,000. Of this amount $415,000 was for cash sales and the remainder was on account. Cash 415,000 Accounts receivable 260,000 Sales revenue 675,000 Question 1 continued over . . . Mgmt 200 Exam 1 Fall 2009 page 1 Question 1 continued 4. The items sold in transaction 3 cost Rover Inc. $358,000. Cost of goods sold 358,000 Inventory 358,000 5. Rover Inc. collected $242,000 from their credit account customers. Cash 242,000 Accounts receivable 242,000 6. During 2008 Rover Inc. paid $352,000 to suppliers for inventory previously purchased on account. Accounts payable 352,000 Cash 352,000 Question 1 continued over . . . Mgmt 200 Exam 1 Fall 2009 page 2 Question 1 continued b. Using the above transactions, complete the following ledger accounts (T accounts) for 2008 for Accounts receivable, Inventory and Accounts payable. Indicate the transaction number and amount. After all transactions have been entered compute the account balance as at December 31, 2008 for each account. The following information is from the Rover Inc December 31, 2007 balance sheet: Accounts receivable $27,000 Inventory $42,000 Accounts payable $36,000 __________________ACCOUNTS RECEIVABLE ___________ Opening balance 27,000 (5) 242,000 (3) 260,000 Balance 45,000 __________________ INVENTORY ___________ ______ Opening balance 42,000 (4) 358,000 (2) 340,000 Balance 24,000 __________________ACCOUNTS PAYABLE ___________ (6) 352,000 Opening balance 36,000 (2) 340,000 Balance 24,000 Mgmt 200 Exam 1 Fall 2009 page 3 Question...
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Mgmt 200 Fall 2009 Exam 1 Solution - First name:...

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