midterm_f2006_solution

midterm_f2006_solution - UNIVERSITY OF WATERLOO School of...

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UNIVERSITY OF WATERLOO School of Accountancy AFM 101 Professor Duane Kennedy, Professor Tom Schneider Mid-Term Examination Fall 2006 Date and Time: October 20, 2006, 4:45 – 6:15pm Pages: 16, including cover Name: ___ Solution ________________ Student Number: __________ Tutorial Number and Time: ___________________ 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. 5) Please verify that this examination paper has the appropriate number of pages. Question Maximum Marks Mark Awarded 1 10 2 12 3 10 4 15 5 8 6 25 Total 80
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Question 1 (10 marks) The following alphabetical listing shows all of the account balances taken from the unadjusted trial balance at December 31, 2006, the end of the first month in business for Virginia Graphics Corporation: Virginia Graphics Corporation Unadjusted Trial Balance December 31, 2006 Accounts Payable $ 1,000 Accounts Receivable 5,500 Advertising Expense 200 Capital Stock 5,000 Cash 3,600 Dividends Declared 5,000 Fees Earned 28,000 Notes Payable 10,000 Office Equipment 14,400 Office Supplies Inventory 600 Prepaid Rent Expense 2,400 Retained Earnings (as at Dec 1, 2006) - 0 - Salaries Expense 13,400 Unearned Fees 1,300 Utilities Expense 200 Required: Provide the adjusting entries required at December 31, 2006. You do not need to include explanations. A) The note payable above was for $10,000 borrowed on December 1, 2006 at the start of the business. The note and interest at 12% are to be repaid on June 30, 2008. Interest expense $100 Interest payable $100 $10,000 * 12% * 1/12 = $100 2
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of 4 years with no salvage value. The company uses straight-line amortization. Amortization expense $300 Accumulated amortization $300 $14,000 = $300 48 months C) The Unearned Fees resulted from cash collected in advance from a new customer, Richmond Company, on December 10, 2006. By December 31, 2006, services amounting to $1,000 had been provided to Richmond Company. Unearned fees $1,000 Fees earned $1,000 D) The manager counted the office supplies inventory on December 31, 2006, and determined that there was $400 of supplies on hand. Office supplies expense $200 Office supplies inventory $200 E) On December 1, 2006, Virginia Graphics paid $2,400 to rent office space and the full amount was debited to the prepaid account. The rent was for six months. Rent expense
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This note was uploaded on 01/30/2011 for the course AFM 101 taught by Professor Kennedy during the Spring '08 term at Waterloo.

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midterm_f2006_solution - UNIVERSITY OF WATERLOO School of...

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