Mgmt 200 Spring 2009 Exam 1 solution

Mgmt 200 Spring 2009 Exam 1 solution - First name: _ Last...

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First name: ___________ Last name: ______________ PUID: ________________________ Purdue University Krannert School of Management MGMT 200 – Introductory Financial Accounting Spring 2009 Exam 1 – February 23, 2009 – SOLUTION OUTLINE This exam consists of 4 questions on 11 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) Marathon Graphics Corporation (MGC) has been in business for several years. It has two stores in California and sells a wide variety of sports related trophies and awards. Required: a. Prepare the journal entry (entries) for each of the following transactions that occurred during 2008. 1. MGC purchased land and building for a third store for $980,000 on March 31, 2008. MGC paid $210,000 cash and signed a ten-year note for the balance of the purchase price. The land was valued at $420,000 and the building at $560,000. Land 420,000 Building 560,000 Cash 210,000 Note payable 770,000 2. During 2008 MGC purchased new inventory from various suppliers for $244,000. All purchases were on credit with terms ranging from 30 to 60 days. Inventory 244,000 Accounts payable 244,000 3. During 2008 sales totaled $620,000. Of this amount $490,000 was for cash sales and the remainder was on account. Cash 490,000 Accounts receivable 130,000 Sales revenue 620,000 4. On December 17, 2008 MGC received an advance payment of $45,000 cash from a customer for a special order to be completed and shipped to the customer in March 2009. The full price of the order is $90,000 and the balance is due on delivery. Cash 45,000 Deferred revenue 45,000 Question 1 continued over . . . Mgmt 200 – Exam 1 – Spring 2009 – page 1
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5. The items sold in transaction 3 had cost MGC $258,000 to acquire. Cost of goods sold 258,000 Inventory 258,000 6. During 2008 MGC collected $136,000 from their credit account customers. Cash 136,000 Accounts receivable 136,000 7. During 2008 MGC paid $223,000 to suppliers for inventory previously purchased on account (transaction 2). Accounts payable 223,000 Cash 223,000 8. MGC incurred operating expenses of $217,000 during 2008. $202,000 was paid in cash and the remaining $15,000 will be paid on January 22, 2009. Operating expenses 217,000 Cash 202,000 Expenses payable 15,000 9. On November 23, 2008 an analyst a J.P. Morgan issued a negative report on MGC. As a result MGC’s share price fell from $27 to $22 per share. MGC has 500,000 shares outstanding. No entry required.
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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 Spring 2009 Exam 1 solution - First name: _ Last...

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