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MGT201 - Test _1 - solutions

MGT201 - Test _1 - solutions - MGT201 Term Test Winter 2009...

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MGT201 Term Test Winter 2009 PART A ( 20 marks) 1. A 2. C 3. B 4. D 5. B 6. B 7. B 8. B 9. B 10. C 11. B 12. D 13. A 14. D 15. B 16. A 17. B 18. A 19. B 20. B Part B (10 marks) a. The errors are: Prepaid rent is recorded on the income statement; it should be a current asset. Dividends are recorded on the income statement; they should be deducted in retained earnings. (This is just a presentation error and would not affect the balance sheet from balancing). Amortization expense should be recorded on the income statement and not deducted from the asset. b. Westminster Groceries Corp. Income Statement For the Year Ended December 31, 2008 Sales Revenue $326,000 Costs and expenses: Cost of goods sold $ 182,000 Salaries & Wages expense 24,600 Amortization expense 14,200 Rent expense 24,000 Supplies expense 2,100 246,900 Earnings before taxes $79,100 Income tax expense 26,000
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Net income $53,100 Westminster Groceries Corp. Statement of Retained Earnings For the Year Ended December 31, 2006 Retained earnings, January 1, 2008 $138,200 Add: Net income 53,100 192,300 Deduct: Dividends declared ( 5,000 ) Retained earnings, December 31, 2008 $186,300 Westminster Groceries Corp.
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