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2007-sum-test_(solution) - MGT120 Test#1 Summer 2007 Part...

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MGT120 Test #1 Summer 2007 Part A (10 marks) 1. c 2. a 3. b 4. b 5. a 6. d 7. a 8. a 9. c 10. b Part B ( 20 marks) 1-Sep Cash 10,000 Common shares 10,000 1-Sep Truck 20,000 Cash 5,000 Car Loan 15,000 2-Sep Dance equipment 4,200 Cash 420 Accounts payable 3780 1-Sep Prepaid Rent 1500 Cash 1500 1-Sep Cash 40,000 Unearned Revenue 40,000 1-Sep Cash 4,000 Revenue 4,000 1-Sep Prepaid Insurance 600 Cash 600 14-Sep Dividends 500 Cash 500 24-Sep Salaries expense 500 Cash 500
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Sept 24 Dividends 2000 Cash 2000 30-Sep Telephone expense 50 Utilities expense 140 Accounts payable 190 Operating expenses 1500 Cash 1500 Adjusting journal entries 30-Sep Amortization expense - truck 417 Accumulated amortization - truck 417 $20,000 / 4years / 12 months = $417 30-Sep Amortization expense - equipment 70 Accumulated amortization - equipment 70 $4,200/5 years / 12 months = $70 30-Sep Interest expense 125 Interest payable 125 $15,000 x 10%/ 12 months = $125 30-Sep Rent Expense 500 Prepaid Rent 500 30-Sep Insurance Expense 50 Prepaid insurance 50 $600 / 12 months - $50 30-Sep Unearned revenue 2000 Revenue 2000 30-Sep Salaries expense 400 Salaries payable 400 $500/5 days x 4 days 30-Sep Income tax expense 1034 Income tax payable 1034 Net income x 45%
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