MIDTERM EXAMS
(BBA) 1
STSEMESTER, 2012
Subject: ACCOUNTING
Total Marks: 60 Time Allowed: 3 Hours Note: Attempt any Five Questions, All Questions Carry Equal Marks.
QUESTION # 1.
Water-Wise Landscaping was, organized on September 1 of the current year and had the following account balances at December 31, listed in tabular form.
Assets = Liabilities + Owner’s Equity
Cash + Land + Building + EquipmentOffice = PayablesNotes + Accounts Payable + CapitalGreen
Balances $14,800 $50,000 $45,000 $22,500 $32,000 $25,300 $75,000
Early in January, the company carried out the following transactions:
1. The owner, J. Green, deposited $20,000 in personal funds into the bank account of the business. 2. Purchased land and a small office building for a total price of $80,000, of which $30,000 was the
value of the land and $50,000 was the value of the building. Paid $20,000 in cash and signed a note payable for the remaining $60,000.
3. Bought a Xerox copying machine on credit for $9,500 (30-day open account).
4. Obtained a loan from Gulf Coast Bank in the amount of $18,000. Signed a note payable. 5. Paid the $9,500 account payable originating in transaction 3.
REQUIREMENTS
a. List the December 31 balances of assets, liabilities, and owner's equity in tabular form as shown above.
b. Record the effects of each of the six transactions in the tabular arrangement illustrated above. Show the totals for all columns after each transaction.
QUESTION # 2.
The items making up the balance sheet of Travel Connection at December 31 are listed below in tabular form similar to the illustration of the accounting equation on page 25.
Assets = Liabilities + Owner’s Equity
Cash + ReceivableAccounts + Automobiles + EquipmentOffice = PayableNotes + Accounts Payable + CapitalD. Hall
Balances $9,500 $58,400 $9,000 $3,800 $20,000 $25,200 $35,500
During a short period after December 31, travel Connection had the following transactions: 1. Bought office equipment at a cost of $5,700. Paid cash.
2. Collected $4,000 of accounts receivable. 3. Paid $7,200 of accounts payable.
4. Borrowed $10,000 from a bank. Signed a note payable for that amount.
5. Purchased an automobile for $15,500. Paid $3,000 cash and signed a note payable for the balance of $12,500.
REQUIREMENTS
a. List the December 31 balances of assets, liabilities, and owner's equity in tabular form as shown above.
b. Record the effects of each of the five transactions in the tabular arrangement illustrated above. Show the totals for all columns after each transaction.
QUESTION # 3.
Stadium Parking was organized on July 1 to operate a parking lot near a new sports arena. The following transactions occurred during July prior to the company beginning its regular business operations.
July 1 Sylvia Snyder opened a bank account in the name of the business with a deposit of $45,000 cash. July 2 Purchased land to be used as the parking lot for a total price of $140,000. A cash down payment of
$28,000 was made and a note payable was issued for the balance of the purchase price. July 5 Purchased a small portable building for $4,000 cash. The purchase price included installation of the
building on the parking lot.
July 12 Purchased office equipment on credit from Suzuki & Company for $3,000. July 28 Paid $2,000 of the amount owed to Suzuki & Company.
The account titles used by Stadium Parking to record these transactions are as follows
Cash………... Notes Payable ………
Land ……….. Accounts Payable ………..
Building……….. Sylvia Snyder, capital ………
Office equipment………..
REQUIREMENTS
a. Prepare journal entries for the month of July.
b. Post to ledger accounts of the three – column running balance form.
QUESTION # 4.
Elizabeth Carver, a certified public accountant, resigned from her position with a large CPA firm in order to begin her own public accounting practice. The business transactions during September while the new venture was being organized are listed below.
Sept. 10 Purchased a small office building located on a large lot for a total price of $91,200, of which $48,000'was applicable to the land and $43,200 to the building. A cash payment of $18,240 was made and a note payable was issued for the balance of the purchase price.
Sept. 15 Purchased a microcomputer system from Computer Stores, Inc., for $4,680 cash.
Sept. 19 Purchased office furniture, filing cabinets, and a typewriter from Davidson Office Supply Company at a cost of $3,960. A cash down payment of $720 was made, the balance to be paid in three equal installments due September 28, October 28, and November 28. The purchase was on open account and did not require signing of a promissory note.
Sept. 26 A $140 monitor in the microcomputer system purchased on September 15 stopped working. The monitor was returned to Computer Stores, Inc., which promised to refund the $140 within five days.
Sept. 28 Paid Davidson Office Supply Company $1,080 cash as the first installment due on the account payable for office equipment.
Sept. 30 Received $140 cash from Computer Stores, Inc., in full settlement of the account receivable created on September 26.
REQUIREMENTS
Prepare journal entries to record the above transactions.
QUESTION # 5.
In June 1994, Chris Scott organized a crop-dusting business. The company, a sole proprietorship, called Scott Crop Dusting, began operations immediately. Transactions during the month of June were as follows: June 1 Scott deposited $60,000 cash in a bank account in the name of the business.
June 2 Purchased a crop-dusting aircraft from Utility Aircraft for $225,000. Made a $45,000 cash down payment and issued a note payable for $180,000.
June 4 Paid Woodrow Airport $2,500 to rent office and hangar space for the month.
June 15 Billed customers $8,320 for crop-dusting services rendered during the first half of June. June 15 Paid $5,880 salaries to employees for services rendered during the first half of June. June 18 Paid Hannigan's Hangar $1,890 for maintenance and repair services:
June 25 Collected $4,910 of the amounts billed to customers on June 15.
June 30 Billed customers $16,450 for crop-dusting services rendered during the second half of the month.
June 30 Paid $6,000 salaries to employees for services rendered during the second half of June. June 30 Received a fuel bill from Henry's Feed & Fuel for $2,510 of aircraft fuel purchased during
June. This amount is due by July 10.
June 30 Scott withdrew $2,000 cash from the business for personal use. The account titles used by Scott Crop Dusting were:
Cash………... Chris Scott, drawing ……….. Accounts receivable..……….. Crop-dusting revenue……….
Aircraft ……….. Maintenance expenses .….………
Notes payable ………. Fuel expenses ………..….……….
Accounts Payable ….………. Salaries expenses .….……… Chris Scott, capital ….………. Rent expenses .….……….
REQUIREMENTS
a. Prepare journal entries.
b. Post to ledger accounts. (Cash, Accounts Receivable, Notes payable and Accounts payable ledgers only)
QUESTION # 6.
Air Wolfe provides transportation by helicopter for skiers, backpackers, and others to remote mountainous areas. Among the ledger accounts used by the company are the following:
Cash Advertising expense Accounts payable Fuel expense
Amy Wolfe, capital Rent expense
Amy Wolfe, drawing Repair & maintenance expense Passenger fare revenue Salaries expense
Some of the January transactions of Air Wolfe are listed below: Jan. 3 Paid $1,600 rent for the building for January.
Jan. 4 Placed advertising in local newspapers for publication during January. The agreed price of $520 was payable within 10 days after the end of the month.
Jan. 15 Cash receipts from passengers for the first half/of January amounted to $9,470. Jan. 16 Amy Wolfe, the owner, withdrew $3,000 cash for personal use.
Jan. 16 Paid salaries to employees for services rendered in first half of January, $5,265.
Jan. 29 Received a bill for fuel used from Western Oil Company, amounting to $1,930, and payable by February 10.
Jan. 31 Paid $1,642 to Stevens Aircraft for repair and maintenance work during January.
REQUIREMENTS
Prepare a journal entry.
Environmental Services is a weather forecasting service which provides information to growers and dealers in perishable communities. Its ledger account balances at November 30 were as shown in the following Accounts Payable ….… $ 7,000 Land…. ………..… 85,200………..
Accounts receivable..……16,700……….. Notes payable ………1,45,000 Automobiles………14,600……….. Notes receivable.….………2,400…… Building ………110,000………. Office furniture ..….………12,900…………. Carl Ford, Capital.. ….……1,29,650 Office supplies.……….……850……… Cash……….….……17,650 Property taxes payable..…1,060…….
Computer………….….……18,800………. Salaries payable……….… 3,740………. Computer Software….……5,450………. Technical library………...…1,900……….
REQUIREMENTS
Prepare a trial balance with the accounts arranged in financial .statement order. Include a proper heading for your trial balance.
