midterm_f2007_solution

midterm_f2007_solution - UNIVERSITY OF WATERLOO School of...

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UNIVERSITY OF WATERLOO School of Accountancy AFM 101 Professor Duane Kennedy Mid-Term Examination Fall 2007 Date and Time: October 19, 2007, 4:45 – 6:15pm Pages: 16, including cover Tutorial Number and Time: Solution Instructions: 1) Cordless calculators may be used. The calculator must be standalone with no other communication or data storage features. 2) Answers for the multiple-choice questions must be recorded on the UW answer card. All other questions must be answered in the space provided on the examination paper. Answers written outside of the provided space will not be graded. You must submit both this examination paper and the UW answer card. 3) Show details of all calculations. 4) The final page of the examination contains a list of ratios. For your convenience, this page may be detached from the examination paper. 5) Please verify that this examination paper has the appropriate number of pages. Question Maximum Marks Mark Awarded 1 14 2 20 3 12 4 10 5 8 6 21 Total 85
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Question 1 (14 marks) Hawthorn Landscaping Corporation is a small company which specializes in the design and construction of unique lawns and gardens for businesses and individuals. At the end of June 2007, the company had $250,000 of net assets and $121,000 of liabilities. Required: Provide the journal entries required to record the following transactions that occurred in July 2007. You do not need to include explanations. Answers must appear in the space provided. A) The company received a deposit of $1,500 from a customer, J. Thomson, for work to be done in August. Cash $1,500 Unearned Revenue $1,500 B) The company sold an old dump truck for $4,250, received in cash. The truck had an original cost of $35,500 and accumulated amortization of 24,800. Cash $4,250 Accumulated Amortization 24,800 Loss on Sale of Truck 6,450 Truck $35,500 C) The company received an electric and gas utility bill of $575 for the month of July which is due to be paid in August. Utility Expense $575 Utilities Payable $575 2
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D) Salaries of $8,750 for the month of July were paid. Salaries Expense $8,750 Cash $8,750 E) Paid $5,800 on account for landscaping supplies which were delivered in June. Accounts Payable $5,800 Cash $5,800 F) Completed a landscaping project for R. Brown. The invoice price was $11,300. The customer had paid a deposit of $2,000 in June and the remainder of the invoice will be billed on account for collection in August. Unearned Revenue $2,000 Accounts Receivable 9,300 Revenue $11,300 G) The company purchased a new tractor for use in the business. The cost was $22,400. The company paid $5,000 in cash and signed a short-term note for the remainder. Equipment $22,400 Cash $5,000 Short-term Note Payable 17,400 3
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