Financial Accounting Midterm 1 Solutions

Financial Accounting Midterm 1 Solutions - INTRODUCTION TO...

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Unformatted text preview: INTRODUCTION TO FINANCIAL ACCOUNTING 33:010:272 SECTIONS 08 81 09 |FALL 2011 Rutgers Business School Newark and New answick PROFESSOR JULIAN YEO Solutions to Mid-Term 1 Question 1) Journal Entries, Balance Sheet and Income Statement Solutions: a & b. Construct the balance sheet to capture the missing balance in Retained Earnings. Balance Sheet (4 points) — each line item 1/2 point Correct balance in Retained Earnings — 2 points AD&G Ltd Balance Sheet As at Dec 31, 2008 Cash 238 Interest Payable 100 Accounts Receivable 820 Loan from Bank 2,000 Inventory 1 ,500 PP&E 660 Accumulated Dep (4401 Common Stocks 300 Net PP &E 220 Retained Earnings 378 Total Assets 2778 Total Liabilities & Equities 2778 c. Show the journal entries for all transactions that occurred during 2009 (items 1 to 12). 1. Dr Cash 10,000 Cr Common Stocks 10,000 2. Recognizing the purchase at the machine Dr PP&E 500 Cr Cash 500 Update Depreciation Expense Dr Depreciation Expense 50 INTRODUCTION TO FINANCIAL ACCOUNTING 33:010:272 SECTIONS 08 81 09 |FALL 2011 Rutgers Business School Newark and New answick PROFESSOR JULIAN YEO Cr Accumulated Depreciation 50 Recognizing the sale of machine Dr Cash 400 Dr Accumulated Depreciation 50 Dr Loss on Sale of Machine 50 Cr PP&E 500 3. Dr Depreciation Expense 1 10 Cr Accumulated Depreciation 1 10 4. Dr Prepaid Rent 1,440 Dr Rental Expense 1,440 Cr Cash 2,880 5 . Dr Inventory 4,000 Cr Cash 3,500 Cr Accounts Payable 500 6. Recognizing Sales Dr Cash 9,800 Dr Accounts Receivable 2,200 Cr Sales 12,000 Recognizing COGS Dr COGS 2,400 Cr Inventory 2,400 7. Dr Cash 1,940 Cr Accounts Receivable 1,940 8. Dr Cash 6,000 Cr Advance from Customer 4,500 Cr Consulting Revenue 1,500 9. Dr R & D Expense 2,150 Cr Cash 2,150 INTRODUCTION TO FINANCIAL ACCOUNTING 33:010:272 SECTIONS 08 81 09 |FALL 2011 Rutgers Business School Newark and New answick PROFESSOR JULIAN YEO 10. Dr Retained Earnings 250 Cr Dividends Payable 250 11. Dr Interest Expense 100 Cr Interest Payable 100 Dr Interest Payable 100 Cr Cash 100 12. Dr Wages Expense 1,820 Cr Cash 1,650 Cr Wages Payable 170 (2 points per entry) (1. Prepare AD&G’s Income Statement for the year ended December 31, 2009. (6 points) AD&G Ltd, Income Statement For the year ended December 31, 2009 Revenue Sales Revenue 12,000 Consulting Revenue m Total Revenue 13,500 Expenses COGS 2,400 Depreciation Expense 160 Rental Expense 1,440 R&D Expense 2,150 Interest Expense 100 Wages Expense M Total Expenses (8,070) Loss on Sales of Assets (50) Net Income 5,380 INTRODUCTION TO FINANCIAL ACCOUNTING 33:010:272 SECTIONS 08 81 09 |FALL 2011 Rutgers Business School Newark and New answick PROFESSOR JULIAN YEO Each mistake subtract 1/2 point Additional information (not required for mid-term) Prepare AD&G Ltd’s Balance Sheet as at December 31, 2009. AD&G Ltd Balance Sheet As at Dec 31, 2009 Cash 17,598 Accounts Payable 500 Accounts Receivable 1,080 Interest Payable 100 Inventory 3 ,100 Wages Payable 170 Prepaid Rent Lfl Dividend Payable 250 Total Current Assets 23,218 Advance from Customers M Total Current Liab. 4,020 PP&E 660 Accumulated Dep 15501 Loan from Bank 2,000 Net PP &E 110 Advance from Customers 1,5_00 Total Non-Current Liab. 3,500 Common Stocks 10,300 Retained Earnings 5,508 Total Assets 23,328 Total Liabilities & Equities 23,328 ...
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Financial Accounting Midterm 1 Solutions - INTRODUCTION TO...

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