Mgmt 200 Spring 2011 Exam 1 solution

Mgmt 200 Spring 2011 Exam 1 solution - First name: _ Last...

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First name: _________________ Last name: ____________________ PUID: ________________________ Purdue University Krannert School of Management MGMT 200 – Introductory Financial Accounting Spring 2011 Exam 1 – February 22, 2011 - SOLUTION This exam consists of 4 questions on 14 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 (20 points) ________ Question 2 (30 points) ________ Question 3 (25 points) ________ Question 4 (25 points) ________ TOTAL (100 points) ________
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Question 1. Journal entries and ledger accounts (20 points) H&S Property Management (HSPM) was formed in July 2010 to provide property management services to absentee property owners and landlords in the West Lafayette area. The following transactions occurred during 2010. Required: a. Prepare the journal entry (entries) for each of the following transactions that occurred during 2010 (if no entry is required write “None required”). 1. HSPM issued 4,000 common shares to a small group of individuals for $4 per share. Cash 16,000 Common stock 16,000 2. HSPM presented a business plan to the small company division of the local bank and was able to negotiate a bank loan for $12,000. Cash 12,000 Note payable 12,000 3. HSPM negotiated a lease on a piece of property suitable for its business. The rent payment for the first year is $1,000 per month and HSPM paid two month’s rental in advance. Prepaid rent 2,000 Cash 2,000 Question 1 continued over . . . Mgmt 200 – Exam 1 – Spring 2011 – page 1
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Question 1 continued 4. HSPM purchased office equipment and furniture to equip their new facility. The equipment cost $15,000 and was paid in cash. Equipment 15,000 Cash 15,000 5. HSPM purchased supplies to be used in running the business operations. The supplies cost $4,200 and were purchased on account. Supplies inventory 4,200 Accounts payable 4,200 6. HSPM purchased a one-year general liability insurance policy for $1,800 cash. Prepaid insurance 1,800 Cash 1,800 7. HSPM paid advertising expenses for a series of television ads that aired in 2010 of $2,500. Advertising expense 2,500 Cash 2,500 Question 1 continued over . . . Mgmt 200 – Exam 1 – Spring 2011 – page 2
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Question 1 continued 8. HSPM paid for the supplies purchased in transaction 5 above. Accounts payable 4,200 Cash 4,200 b. Using the above transactions, complete the following ledger account (T account) for 2010 for Cash. Indicate the transaction number and amount. After all transactions have been entered compute the account balance as at December 31, 2010. __________________________CASH
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Mgmt 200 Spring 2011 Exam 1 solution - First name: _ Last...

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