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Fall 2014 ACC 311 Exam 1

SECTION II (40 points). Where calculations are necessary, you MUST show your work to receive credit
for your answers and to receive partial credit. Please try to be as neat and organized as possible. Assume
that the accrual basis of accounting applies to all questions, unless a question specifically instructs
otherwise.

SOLUTION: 1 POINT EACH JOURNAL ENTRY POINT EACH LINE


March 1st

Accounts

Cash A+

Debit
3000

Common Stock SE+

March 2nd

Credit
3000

Accounts

Debit

Credit

Debit

Credit

NO ENTRY NEEDED

March 3rd

Accounts

Equipment A+

2700

Notes Payable L+

March 5th

2700

Accounts

Retained Earnings SE-

Debit
5000

Dividends Payable L+

March 7th

Credit
5000

Accounts

Debit

Credit

Debit

Credit

NO ENTRY NEEDED

March 12th

Accounts

Supplies E+, SE-

1300

Accounts Payable L-

March 15th
Cash A+

1300

Accounts

Debit
800

Credit

Fall 2014 ACC 311 Exam 1

Service Revenue or Revenue R+, SE+

March 19th

Accounts

Cash A+

800

Debit

Credit

700

Unearned Revenue L+

March 25th

700

Accounts

Unearned Revenue L-

Debit

Credit

700

Service Revenue or Revenue R+, SE+

March 30th

Accounts

700

Debit

Utilities Expense E+,SE-

Credit
95

Cash A-

March 31st
Prepaid Rent A+
Cash A-

95

Accounts

Debit

Credit

600
600

Fall 2014 ACC 311 Exam 1

PROBLEM 2: (14 pts.) STATEMENT OF CASH FLOWS OPERATING SECTION


Highland Consulting Company
Statement of Cash Flows
For the Year Ended December 31, 2010
Subtract 2 points for investing/financing lines included with Operating Cash Flows
Cash flows from operations
Net income
Adjustments:
Depreciation
Increase in accounts receivable
Increase in supplies
Increase in prepaid expenses
Increase in accounts payable
Decrease in salaries payable
Net cash provided by operating activities
* I am not assigning points to the total..this would just be a follow through if it was wrong.
Net cash provided by Investing activities

$186,400 2pts
46,500 2pts
<62,800> 2pts
<9,650> 2pts
<12,400> 2 pts
34,700 2pts
<500> 2pts
182,250 *

$ <104,000>

- DO NOT COMPLETE THE OPERATING SECTION


Net cash provided by Financing activities

$ < 30,350>

Net increase in cash


Beginning cash balance
Ending cash balance

$ 47,900
$ 48,400
$ 96,300

Fall 2014 ACC 311 Exam 1

PROBLEM 3: (15 pts.) ADJUSTING ENTRIES


Blanco Corporation is completing the accounting information processing cycle at the end of the fiscal
year, June 30, 2014. The following trial balances are on Blanco's worksheet at June 30, 2014.
Unadjusted
Trial Balance
DEBITS CREDITS
13,000
15,000
55,000
6,000
400,000
55,000
12,000
35,000
0
0
100,000
154,000
825,000
505,000
0
150,000
0
37,000
1,181,000 1,181,000

ACCOUNTS
Cash
Accounts receivable
Inventory
Prepaid insurance
Equipment
Accumulated depreciation
Accounts payable
Unearned revenue
Wages payable
Income tax payable
Contributed capital
Retained earnings
Sales revenues
Cost of goods sold
Depreciation expense
Wages expense
Insurance expense
Income tax expense
Totals

Adjusted
Trial Balance
DEBITS CREDITS
13,000
20,000
55,000
3,000
400,000
105,000
12,000
15,000
16,000
13,400
100,000
154,000
850,000
505,000
50,000
166,000
3,000
50,400
1,265,400 1,265,400

SOLUTION 2 points each journal entrycount the first one as two (12 points total)
1 point each line
A.
Accounts
Accounts receivable

Debit

Credit

5,000

Unearned revenue

20,000

Sales revenues

25,000

Note: Could be two separate entries

Accounts
Insurance expense

Debit

Credit

3,000

Prepaid insurance

Accounts
Depreciation expense
Accumulated depreciation

3,000

Debit

Credit

50,000
50,000

Fall 2014 ACC 311 Exam 1

Accounts
Wages expense

Debit

Credit

16,000

Wages payable

16,000

Accounts
Income tax expense

Debit

Credit

13,400

Income tax payable

13,400

B. 3 points for the closing entry


1 point for correct Retained Earnings (both or oneonly 1 point)
1 point for correct debit to Sales Revenue account
1 point for correct credits to Expense accounts
Accounts

Debit

Credit

850,000

Sales revenues
Cost of goods sold

505,000

Depreciation expense

50,000

Wages expense

166,000

Insurance expense

3,000

Income tax expense

50,400

Retained earnings

75,600

OR TWO SEPARATE ENTRIES


Accounts
Sales revenues

Debit

Credit

850,000

Retained Earnings

850,000

Cost of goods sold

505,000

Depreciation expense

50,000

Wages expense

166,000

Insurance expense

3,000

Income tax expense

50,400

Retained earnings

774,400