a. The entry to record the purchase of $800 of equipment on account was never recorded. b. The entry to record the purchase of $1,000 of supplies for cash was recorded as a debit to supplies expense and a credit to accounts payable. The supplies were used immediately. c. A $900 cash sale was recorded as $90. d. A $300 payment on accounts payable was never recorded. e. A $400 credit sale was posted as a debit to sales revenue and a credit to accounts receivable. f. A $6,000 investment by stockholders was recorded as a debit to cash and a credit to investment in marketable securities. g. On December 30, a $2,000 sale on account was made and recorded. However, the goods were not delivered to the customer until January 2. Ignore inventory and COGS effects. Total Assets Total Liabilities Stockholders’ Equity a. Equipment -$800 Accounts payable -$800 NE b. c. d. e. f. g. Assume that all entries have been recorded for the year, including closing entries, write journal entries on the next page to correct the effects of errors e., f. and g., above, on the permanent accounts.
Acc 311 - Exam I Form A Page 11 e. ACCOUNTS DEBITCREDIT f. ACCOUNTS DEBITCREDIT g. ACCOUNTS DEBITCREDIT
Acc 311 - Exam I Form A Page 12 PROBLEM 2 (20 pts) ABC Company is preparing its month-end financial statements for the year ending December 31, 2009. In the modified journal on the next page, record an adjusting entry, if necessary, for each economic event described or implied in the list below and indicate whether the item is related to an operating (O), investing (I), or financing (F) activity (arbitrary cash flow classification rules don’t apply). For example, the economic event in a, below, is that the equipment has been used during the year, not that it was previously purchased. a. ABC Company purchased equipment on January 1, 2009 for $12,000. The equipment has a 5 year useful life and an estimated salvage (residual) value of $2,000. (ABC Company uses straight-line depreciation) b. In order to finance additional purchases of equipment, ABC Company borrowed $10,000, on July 1, 2009 and signed a 5 year note with a 12% annual interest rate. Interest payments are due on July 1 each year. c. On October 1, 2009, ABC Company signed a two year rental agreement with XYZ Company. As part of the agreement, ABC Company was required to pay 6 months of rent in advance in the amount of $9,000. d. ABC estimates that it used $750 in utilities during the month of December, 2009. The bill for the utilities will not be received until January. e. On November 30, 2009, Customer A prepaid for services in the amount of $4,000 that were 50% complete as of December 31. f. On December 1, 2009, Customer B signed a contract with ABC for services in the amount $3,000. ABC completed 100% of the services for B, as of December 31, but has not received payment. g. On October 1, 2009, ABC invested in a certificate of deposit (CD) that pays 8% interest.
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