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ExamI-Solutions - Solutions ACCOUNTING 101 Examination 1...

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Solutions ACCOUNTING 101 Examination 1 Fall Semester, 2003 Requests for regrades MUST INCLUDE BOTH a written explanation of the points at issue and the original copy of the examination. A signed regrade request from much accompany each regrade request Recall that only exams written in pen will be accepted for regrade!
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Accounting 101, Spring 2003 Name: S S # : Mid-term Examination 1 Page 1 Question 1: (40 points) Presented below is the 2001 year-end Balance Sheet for Philly Car Wash . It’s fiscal year ends December 31. Philly Car Wash Balance Sheet December 31, 2001 Assets Liabilities Cash $ 15,000 Accounts payable $ 2,000 Supplies Inventory 7,000 Unearned revenue 4,000 Prepaid rent 2,000 Salaries payable 2,000 Prepaid insurance 4,000 Equipment (Gross) 24,000 Owners’ Equity Accumulated Depreciation (8,000) Common stock 24,000 Retained earnings 12,000 Total Assets $44,000 Total Liabilities and Owners’ Equity $44,000 Philly Car Wash sells individual car washes for $5 per vehicle. All of these sales are for cash. In addition, Philly Car Wash sells booklets that contain 10 coupons each. Each coupon is good for one car wash. Philly Car Wash sells each booklet of 10 coupons for $40 and recognizes the same amount of revenue for each coupon. All booklet sales are for cash. The balance in the Unearned revenue account refers to coupons which were still unused as of the end of year 2001. The company rents the land and building containing its car wash but owns its own equipment. Information concerning transactions and other events occurring during year 2002 is provided below: 1. During the year the company sold 350 booklets of coupons. 2. During the year the company washed 3600 cars. For those car washes, the company received 2500 individual coupons and cash for the rest. 3. During the year the company paid $7,000 in salaries to its employees (i.e. salaries). It’s 2002 ending balance in Salaries payable was $2500. 4. During the year the company had a number of transactions with its suppliers: a) It bought supplies at a cost of $1000 on account. b) It paid its suppliers $900. c) It returned supplies costing $200 for a full cash refund. d) At December 31, 2002, the balance in its Supplies inventory account was $4200. 5. The beginning balance in the Prepaid rent account represents two years’ worth of rent. 6. The beginning balance in the Prepaid insurance account represents 8 months’ worth of insurance. On June 1, 2002, Philly Car Wash paid $6000, in cash, for insurance coverage lasting from Sept. 1, 2002 through August 31, 2003. 7. Depreciation expense for 2002 is $4000. 8. The company issued additional shares of common stock for $16,000 in cash.
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Accounting 101, Spring 2003 Name: S S # : Mid-term Examination 1 Page 2 REQUIRED: a) (31 points) In the space provided below, record the journal entries for all EIGHT transactions listed above. Also, record all of the necessary adjusting entries related to those transactions. Please note that transaction 4 consists of parts a, b, c, and d.
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ExamI-Solutions - Solutions ACCOUNTING 101 Examination 1...

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