Exam 1 Solution - LAST NAME FIRST NAME_PUID Purdue University Krannert School of Management MGMT 200 Introductory Financial Accounting Maymester

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LAST NAME: _____________ FIRST NAME______________PUID_________________ Purdue University Krannert School of Management MGMT 200 – Introductory Financial Accounting Maymester 2010 Exam 1 – Wednesday, May 26, 2010 - Solution This exam consists of 4 questions on 12 pages (excluding this cover page) for a total of 110 points. Time allowed: 110 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 (30 points) ________ Question 2 (30 points) ________ Question 3 (20 points) ________ Question 4 (30 points) ________ TOTAL (110 points) ________
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Question 1. Journal entries and ledger accounts (30 points) Sydney Surfboards Inc. was organized on April 1, 2009 to sell surfboards and related products. The company was started by Steve Waugh and three of his friends. Required: a. Prepare the journal entry (entries) for each of the following transactions that occurred during the first month of business (April, 2009). 1. (2) Received $100,000 in cash from each of the four owners in exchange for shares of stock in Sydney Surfboards Inc. Cash 400,000 Capital stock 400,000 2. (3) Purchased a retail store in San Diego, CA for $450,000 on April 4, 2009. Sydney Surfboards paid $250,000 in cash and signed a 15-year note for the balance. The purchase price was allocated to land ($300,000), building ($135,000), and equipment ($15,000). Land 300,000 Building 135,000 Equipment 15,000 Cash 250,000 Note payable 200,000 3. (2) Purchased surfboards and related stock from Surfboards’R’Us for $180,000 on credit. Sydney Surfboards is given 30 days to pay the amount due. Inventory 180,000 Accounts payable 180,000 Question 1 continued over . . . MGMT 200 – Exam 1 – Maymester 2010 – page 1
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Question 1 continued 4. (2) The store opened to the public on Wednesday April 15, 2009. During the last two weeks in April, Sydney Surfboards sold surfboards for $91,000. These were all cash sales except for sales of $14,000 to a local surfboard rental company which were on credit. Cash 77,000 Accounts receivable 14,000 Sales revenue 91,000 5. (2) The surfboards sold in transaction 4, above, cost Sydney Surfboards $60,700. Cost of goods sold 60,700 Inventory 60,700 6. (2) Received a $600 bill from the utility company for gas and electricity used in April, 2009. The bill has a due date of May 16, 2009. Utilities expense 600 Expenses payable 600 7. (2) Paid $19,000 in salaries and wages for April, 2009. Wages expense 19,000 Cash 19,000 Question 1 continued over . . . MGMT 200 – Exam 1 – Maymester 2010 – page 2
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Question 1 continued b. (10) Complete the following ledger T accounts for the assets cash and inventory for the month of April, 2007. Indicate the transaction number and amount. After all transactions have been entered compute the account balance. ___________________________CASH
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This note was uploaded on 02/20/2012 for the course MGMT 200 taught by Professor Greigg during the Fall '08 term at Purdue University-West Lafayette.

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Exam 1 Solution - LAST NAME FIRST NAME_PUID Purdue University Krannert School of Management MGMT 200 Introductory Financial Accounting Maymester

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