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Accounting_1A_Exam_1_Solution_-_Winter_2008

# Accounting_1A_Exam_1_Solution_-_Winter_2008 - Management 1A...

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Management 1A Winter 2008 Danny S. Litt EXAM 1 Solutions I agree to have my grade posted by Student ID Number ________________ _________________ (Signature) (Student ID Number) Name: ________________ PROBLEM POINTS SCORE 1 15 2 10 3 10 4 10 5 15 6 15 7 25 TOTAL 100

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M ANAGEMENT 1A N AME : __________________________ Page | 1 Problem 1 The records of Skymaster Airplane Rentals show the following information as of December 31, 2007 Accounts payable . .......................... \$36,000 2007 Wages expense . ..................... \$75,000 Insurance expense . ......................... 2,000 2007 Advertising expense . ............. 22,000 Accounts receivable . ...................... 24,000 Cash . .............................................. 11,000 Retained earnings, Common stock . .............................. 20,000 December 31, 2006 . .................... 130,000 Office Furniture . ............................ 15,000 Airplanes . ....................................... 150,000 2007 Maintenance expense 39,000 Notes payable . ................................ 47,000 2007 Revenues . .............................. 217,000 Hangar . ........................................... 60,000 Dividends of \$52,000 were paid during 2007. Requirements: a) Using the above information, prepare an income statement for 2007. SKYMASTER AIRPLANE RENTALS Income Statement For Year Ended December 31, 2007 Revenues \$ 217,000 Expenses Insurance expense \$ 2,000 Wages expense 75,000 Advertising expense 22,000 Maintenance expense 39,000 Total expenses 138,000 Net income \$ 79,000
M ANAGEMENT 1A N AME : __________________________ Page | 2 b) Using the above information, prepare a statement of retained earnings for 2007. SKYMASTER AIRPLANE RENTALS Statement of Retained Earnings For Year Ended December 31, 2007 Retained earnings, December 31, 2006 . .............................. \$130,000 Add: Net income . ................................................................ 79,000 209,000 Less: Dividends . .................................................................. (52,000 ) Retained earnings, December 31, 2007 . .............................. \$157,000 c) Using the above information, prepare a balance sheet at December 31, 2007. SKYMASTER AIRPLANE RENTALS Balance Sheet December 31, 2007 Assets Liabilities Cash . ................................. \$ 11,000 Accounts payable . ............ \$ 36,000 Accounts receivable . ......... 24,000 Notes payable . .................. 47,000 Airplane . ........................... 150,000 Total liabilities 83,000 Hangar . ............................. 60,000 Equity Common stock . ................. 20,000 Retained earnings . ............ 157,000 Office furniture . ................ 15,000 Total equity . ..................... 177,000 _______ Total liabilities and Total assets . ...................... \$260,000 equity . ............................. \$260,000

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M ANAGEMENT 1A N AME : __________________________ Page | 3 Problem 2 FastForward has the following beginning cash balance and cash transactions for the month of January. a. Beginning cash balance . ...................... \$ 3,200 b. Cash investment by stockholders . ........ 15,000 c. Cash payment toward long-term loan . . 1,000 d. Cash payment of rent . .......................... 1,800 e. Purchased equipment for cash . ............ 7,500 f. Purchased store supplies for cash . ....... 1,500 g. Cash collected from customers . ........... 7,750 h. Cash dividends paid . ............................ 2,000 i. Cash payment of wages . ...................... 4,000 Requirements: Using this information prepare a statement of cash flows. FastForward Statement of Cash Flows For Month Ended January 31 Cash flows from operating activities Cash collected from customers . ................................... \$ 7,750 Cash paid for supplies . ................................................ (1,500 ) Cash paid for rent . ....................................................... (1,800 ) Cash paid for wages . ................................................... (4,000 ) Cash flows from operating activities . .................................. \$ 450 Cash flows from investing activities Purchase of equipment . ............................................... (7,500 ) Cash flows from financing activities Investment by stockholders . ........................................ 15,000 Dividends . ................................................................... (2,000 ) Payment of loan . .......................................................... (1,000 ) Cash flows from financing activities . .................................. 12,000 Net increase in cash . ............................................................ \$ 4,950 Beginning cash balance . ...................................................... 3,200 Ending cash balance . ............................................................ \$ 8,150
M ANAGEMENT 1A N AME : __________________________ Page | 4 Problem 3 The following trial balance is prepared from the general ledger of Hal's Auto Repair. HAL’S AUTO REPAIR Trial Balance October 31 Debit Credit Cash . .................................................................................... \$ 975 Accounts receivable . ........................................................... 3,800 Supplies . .............................................................................. 500 Repair equipment . ............................................................... 13,000 Office equipment . ................................................................ 6,600 Accounts payable . ............................................................... \$ 4,510 Common stock . .................................................................... 10,000 Retained earnings . ............................................................... 13,000 Dividends 4,200 Repair fees earned . .............................................................. 10,875 Supplies expense . ................................................................ 8,600 ______ Totals . .................................................................................. \$37,675 \$38,385 Because the trial balance did not balance, you decided to examine the accounting records. You found that the following

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Accounting_1A_Exam_1_Solution_-_Winter_2008 - Management 1A...

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