Midterm Answer Key

Midterm Answer Key - 18000 December 31 A/P 975 Unearned...

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ACCT2241 2007 Fall – Midterm A1 Page 1 of 1 pages Q1- 2each Q2- 1 each Q4- 2each 1 CF NE Comparability 2 BS NE Economic entity 3 RE Inc Cost or historical cost 4 IS NE Monetary unit 5 IS NE Relevance NE NE Dec Dec Dec QUESTION #3 (10) 5point each a. The FIFO 100*$5 + 700 * $6 =$4,700 b. The weighted average (1 mark if simple average is used but the second part is correct) $5,700/1000=$5.7 ; $5.7*800=$4,560 QUESTION #5 (18) 3 points each; Q5-3 points each= 18 Q6-3 points each = 24 Account Debit Credit Account Debit Credit Cash 275000 April 8 Capital stock 275000 Prepaid insurance 3300 Cash 3300 Equipment 75000 December 31 Cash 25000 Insurance exp 2200 A/P 50000 Prepaid insurance 2200 November 1 Supplies inventory 975 Cash 10000 A/P 975 N/P 10000 December 31 Cash 22500 Interest expense 150 Revenue 22500 Interest payable 150 August 13 Utility exp 4500 Cash 18000 cash 4500 Subscription revenue
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Unformatted text preview: 18000 December 31 A/P 975 Unearned rent revenue 9000 Cash 975 Rent revenue 9000 October 3 A/R 3000 Service revenue 3000 October 13 Cash 2940 Sales discount 60 A/R 3000 QUESTION #7 (18) 1 (15) Revenue 12500 1 CGS 5,000 1 Gross profit 7,500 2 Operating expenses: Depreciation expense 1,000 1 Insurance expense 1,200 1 Salaries expense 3,000 1 Advertising expense 500 5,700 1 Operating income 1,800 2 Interest expense 800 1 Income before taxes 1,000 2 Income tax expense 1,500 1 Net income $ (500) 1 (3) The multi-step IS shows earnings from different sources (activities) and are of different recurring possibilities, thus allows better assessment of the performance and better prediction of the future....
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