Exam Review Answers

Exam Review Answers - Prepaid insurance 2,500 Cash 2,500 No...

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Problem #1 1 – Liability on balance sheet, credit 2 – Asset on balance sheet, debit 3 – Income statement – credit 4 – Liability on balance sheet, credit 5 – Retained earnings statement, credit 6 – Balance sheet (SE Account) and RE statement, credit 7 – Asset on balance sheet, debit 8 – Contra asset on Balance sheet, credit 9 – Income statement, debit 10 – Income statement, credit 11 – Liability on balance sheet, credit 12 – Income statement, debit 13 – Asset on balance sheet, debit 14 – Retained earnings statement, debit 15 – Income statement, debit 16 – Asset on balance sheet, debit 17 – Income statement, debit 18 – Liability on balance sheet, credit 19 – Income statement, debit 20 – Liability on balance sheet, credit Problem #2 Cash 6,000 Sales 6,000 Increases net income Bonus expense 13,000 Cash 13,000 Decreases net income Supplies 12,000 Cash/AP 12,000 No effect AR 8,000 Sales 8,000 Increases net income
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Cash 8,000 AR 8,000 No effect
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Unformatted text preview: Prepaid insurance 2,500 Cash 2,500 No effect Cash 22,000 Unearned Revenue 22,000 No effect Rent expense 2,000 Cash 2,000 Decrease net income Unearned revenue 22,000 Revenue 22,000 Increase net income ADJUSTING JOURNAL ENTRIES Supplies expense 8,000 Supplies 8,000 Decreases net income Wage expense 4,600 Wages payable 4,600 Decreases net income Insurance expense 208 Prepaid Insurance 208 Decreases net income Problem 3 FIFO Units available for sale: BI = 2,000 units, Purchases = 4,000 units Therefore, if 6,000 were available for sale and 3,500 were sold – 2,500 are left in ending inventory. 2,000 * $1.02 + 500 units * $1.05 = $2,565 Weighted average $6,190/6,000 units = $1.03 per unit 2,500 units * $1.03 = $2,575 Net income would be higher under the Weighted Average method. This is because EI is higher under this method, meaning cost of goods sold would lower. COGS reduces net income....
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This note was uploaded on 10/19/2011 for the course ACCT 2241 taught by Professor Cumming during the Spring '11 term at Dalhousie.

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Exam Review Answers - Prepaid insurance 2,500 Cash 2,500 No...

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