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Mgmt 200 - First name Last name PUID Purdue University...

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First name: _________________ Last name: ____________________ PUID: ________________________ Purdue University Krannert School of Management MGMT 200 – Introductory Financial Accounting Spring 2010 Exam 1 – February 23, 2010 - SOLUTION This exam consists of 4 questions on 12 pages (excluding this cover page) for a total of 100 points. Time allowed: 90 minutes. Answer all questions. To ensure full credit and to maximize partial credit, clearly show all supporting calculations. The exam is closed book. A calculator is permitted. GOOD LUCK . Question 1 (25 points) ________ Question 2 (25 points) ________ Question 3 (20 points) ________ Question 4 (30 points) ________ TOTAL (100 points) ________
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Question 1. Journal entries and ledger accounts (25 points) Rover Inc. has been in business for several years. It has three stores in central Indiana and sells a wide variety of pet food and pet toy products. Required: a. Prepare the journal entry (entries) for each of the following transactions that occurred during 2009. 1. Rover Inc. purchased a building for use as a fourth retail store for $482,000. The purchase price was allocated to land $262,000 and to building $220,000. Rover Inc paid $97,000 cash and signed a twenty-year note for the balance of the purchase price. Land 262,000 Building 220,000 Cash 97,000 Note payable 385,000 2. Rover Inc. purchased new inventory from various suppliers for $180,000. All purchases were on credit with terms ranging from 10 to 60 days. Inventory 180,000 Accounts payable 180,000 3. Sales for 2009 totaled $330,000. Of this amount $215,000 was for cash sales and the remainder was on account. Cash 215,000 Accounts receivable 115,000 Sales revenue 330,000 Question 1 continued over . . . Mgmt 200 – Exam 1 – Spring 2010 – page 1
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Question 1 continued 4. The items sold in transaction 3 cost Rover Inc. $185,000. Cost of goods sold 185,000 Inventory 185,000 5. Rover Inc. collected $102,000 from their credit account customers. Cash 102,000 Accounts receivable 102,000 6. During 2009 Rover Inc. paid $182,000 to suppliers for inventory previously purchased on account. Accounts payable 182,000 Cash 182,000 Question 1 continued over . . . Mgmt 200 – Exam 1 – Spring 2010 – page 2
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Question 1 continued b. Using the above transactions, complete the following ledger accounts (T accounts) for 2009 for Cash, Inventory and Accounts payable. Indicate the transaction number and amount. After all transactions have been entered compute the account balance as at December 31, 2009 for each account. The following information is from the Rover Inc December 31, 2008 balance sheet: Cash $27,000 Inventory $22,000 Accounts payable $18,000 __________________________CASH __________________ Opening balance 27,000 (3) 215,000 (1) 97,000 (5) 102,000 (6) 182,000 Balance 65,000 __________________ INVENTORY ___________ ______ Opening balance 22,000 (4) 185,000 (2) 180,000 Balance 17,000 __________________ACCOUNTS PAYABLE ___________ (6) 182,000 Opening balance 18,000 (2) 180,000 Balance 16,000 Mgmt 200 – Exam 1 – Spring 2010 – page 3
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Question 2. Adjusting Journal Entries (25 points)
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