ACCT 601 Final Exam

ACCT 601

Fall Semester, 2015-16

Final Exam

Name____________________________

1. Prepare journal entries to record each of the following transactions. You do not need to write explanations below the journal entries.

    

1. Create general ledger accounts for each account and post each of the journal entries to an existing general ledger account.

    

1. Prepare adjusting journal entries as you deem necessary. Besides the information provided for adjusting journal entries, review the transactions and review your unadjusted trial balance for any other adjusting journal entries you may need to prepare. 

    

1. Post each of the adjusting journal entries to the general ledger accounts.

    

1. Prepare closing entries and post the entries to the general ledger accounts.

    

1. Prepare trial balances as you deem necessary.

    

1. Prepare the following financial statements, in their proper format, for the month of January

    

• Income statement

   

• Statement of retained earnings

   

• Balance sheet

   

• Statement of Cash Flow

   

Shocker Electronics is a new company that distributes computer equipment to retail outlets.  The following information pertains to Shocker Electronics during their first month of operations:

Suppliers                                                   sales price           cost                      terms

            Xtreme -game systems                  $ 3,000.00       2,400.00                          1% 15, net 30

             HP -office systems                          2,000.00       1,700.00                          1%/20, net/30

            Gateway -home systems                     900.00          720.00                          2%/10, net/30

Customers

            Cuesta Computer                    terms 2%/10 net 30

            Mustang Computer                 terms 2%/10 net 30

            SLO CPU                               terms 2%/10 net 30

            walk-in customers                   cash only - no discount

Jan 1                Issued 10,000 shares of $1 par value common stock for $15 per share.

Jan 1                Made a $50,000 down payment and signed a $600,000 mortgage to purchase land and building, which will be used as the distribution center. The land comprised of three (3) lots which appraised at $132,000 each ($396,000 total)  and the building appraised for $264,000. The building occupies one (1) lot, one (1) lot will serve as parking and WCD intends to sell the third lot.

                        The loan is a ten (10) year, 8.0%  mortgage requiring monthly payments consisting of principle and interest. The first payment is due Feb. 1st.Please attach a loan amortization schedule.

Jan 1                Issued 100 bonds with $1,000 face value and 6% coupon rate. The bonds mature in ten (10) years and pay interest semi-annually on July 1st and January 1st. The bonds sell at a price to yield an 8% effective interest rate.  The effective interest method will be used to amortize the bond premium or discount.  Please attach a bond amortization schedule.

Jan 1                Borrowed $100,000 from First Bank to purchase shelving for the warehouse. The shelving cost $100,000 and is expected to last five (5) years. The note is a three (3) year, 9% note that requires principle and interest payments on the last day of each month. Please attach a loan amortization schedule

Jan 1                Purchase inventory

                        150 systems from Gateway at $720 per system         terms 2%/10, net/30

                        100 systems from HP at $1,700 per system                terms 1%/20, net/30

                        40 systems from Xtreme at $2,400 per system           terms 1% 15, net 30

Jan 1                Paid $1,000 for supplies.

Jan 5                Sold Cuesta Computer sixty (60) Gateway sytstems and forty (40) HP

                        systems, on account.

Jan 6                Paid Gateway bill in full (in the discount period)

Jan 10              Sold SLO CPU twenty-five (25) Xtreme systems.

Jan 14              Received payment in full from Cuesta Computer (in the discount period).

Jan 14              Sold Mustang Computer fifty (50) Gateway sytstems and fifty (50) HP systems. 

Jan 14              Paid HP bill in full (in the discount period)

Jan 15              Purchase inventory

                        75 systems from Gateway at $720 per system           terms 2%/10, net/30

                        50 systems from HP at $1,700 per system                  terms 1%/20, net/30

                        25 systems from Xtreme at $2,400 per system           terms 1%/15, net 30

Jan 16              Paid salaries totaling $5,000 for the first half of the month. In order to make this entry you must know that 15% was withheld for federal income tax, 5% was withheld for state income tax, 7.65% (6.2% social security and 1.45% medicare) was withheld for FICA. Don't forget that the employer is also responsible for matching the employee's contribution to FICA.  All taxes, both the employee’s and employer’s, are paid quarterly throughout the year.

Jan 20              Sold Cuesta Computer forty (40) Gateway systems and forty (40) HP systems, on account.

Jan 22              Sold SLO CPU twenty-five (25) Xtreme systems.

Jan 23              Received payment in full from Mustang Computers (in discount period).

Jan 24              Paid Gateway bill in full (in the discount period)

Jan 25              Received payment in full from SLO CPU. The first invoice was out of discount period and the second invoice was in the discount period.

Jan 27              Sold the extra parcel of land, which was held as an investment, for $125,000.

Jan 28              Paid Xtreme bill in full (first invoice out of the discount period)

                        Paid Xtreme bill in full (second invoice in the discount period)

Jan 29              Paid HP bill in full (in the discount period)

Jan 29              Received payment in full from Cuesta Computer (in the discount period).

Jan 30              Sold Mustang Computer fifty (50) Gateway systems and ten (10) HP systems.

Additional information

                       Accounts Receivable:  Accounts receivable are evaluated at the end of each month.  It is estimated that 2% of all accounts receivable will not be collected.

                       Inventory:  The weighted average cost method is used to value product purchased from each supplier.  Therefore, you will have to calculate inventory values and cost of goods sold by supplier.  A periodic inventory system is utilized.

                        Depreciation on:          building - 20 years, straight-line, no salvage value.

                                                            shelving - 5 years, double declining balance, no

                                                            salvage value

                        Supplies worth $175 are on hand at the end of the month

                         Accrue salaries for the second half of the month (same amount as Jan. 16th salaries).  These salaries will be paid on February 1st.