251SAMPLE_MID

251SAMPLE_MID - SAMPLE MIDTERM BUS 251 A. MACDONALD NOTE:...

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SAMPLE MIDTERM – BUS 251 A. MACDONALD NOTE: This is a very long and tough accounting cycle question. So, if you can handle this question you are in excellent shape. Your midterm will also have two short theoretical questions where you will be asked to explain an accounting idea in words. You might look at the first section of questions at the end of each chapter – the questions titled ‘Assessing your recall’. They will give you an idea of what to expect. I have included only one sample theory question on this exam. The format of your midterm will be roughly as follows: Technical questions (Accounting Cycle And/or Preparation of F/S) 40 marks 2 Theory questions 20 20 Multiple Choice questions 40 Total 100 marks SECTION 1, TECHNICAL QUESTIONS: Q.A THE ACCOUNTING CYCLE (28 MARKS = 28 MINUTES) Andy’s Yard Care Service Company Limited (AYC) Andy Smith has been operating for 3 years. The company provides lawn- mowing, tree trimming and weeding services to private residences in the lower mainland. Andy incorporated the company on January 1 st , 2006 and contributed equipment with a fair market value of $50,000 to the business in exchange for common shares valued at $10,000 and a $40,000 loan, payable to Andy. The following is the trial balance for AYC at January 1 st , 2009: Debit Credit Cash $ 23,500 Accounts Receivable 18,000 Supplies Inventory (1) 1,000 Equipment (2) 50,000 Accounts Payable $ 6,000 Wages Payable 5,000 Loan Payable (3) 40,000 Accumulated Depreciation – equipment 30,000 Common Shares 10,000 Retained Earnings 1,500 $ 92,500 $ 92,500 (1) Consists of fertilizer and topsoil, used in lawn care. (2) Contributed to the business January 1, 2006, estimated to have a 5 year useful life, with no residual value. 1
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(3) Shareholder loan payable bears interest at 10% annually. Interest on the loan is paid on June 30 th and December 31 st each year. Andy does not anticipate receiving any payments on principal until the business becomes better established. REQUIRED: i) Prepare journal entries for the information provided below and on the next page (which covers transactions for the first 3 months of 2009), or explain why no entry is required. (Clearly label each account affected, but detailed explanations for each entry are not required). CLEARLY STATE ANY ASSUMPTIONS THAT YOU FEEL ARE NECESSARY. ii) Prepare any adjusting entries required at March 31 st , 2009. It is not necessary to prepare an entry to close the accounts. iii) Determine the March 31 st , 2009 balance for cash, showing your work. INFORMATION FOR THE FIRST 3 MONTHS OF 2009 1. Services Revenue: The company billed customers $47,250 for work done between January 1 st and March 31 st . This included GST charged to customers of $2,250. 2. At March 31
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This note was uploaded on 02/18/2012 for the course BUSE 237 taught by Professor Sf during the Spring '12 term at Simon Fraser.

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251SAMPLE_MID - SAMPLE MIDTERM BUS 251 A. MACDONALD NOTE:...

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