ACCT 550 Week 8 Final Exam

ACCT 550 Week 8 Final Exam

Author: Christine Farr


1. (TCO A) Listed below are several information characteristics and accounting principles and assumptions. Each of these items is assigned a number. Match the number of each with the appropriate phrase that states its application. Note: Each answer may be used multiple times
2. (TCO B) Adjusting Entries: Minnie Smile, D.D.S. opened a dental practice on January 1, 201X. During the first month of operations the following transactions occurred: performed services for patients who had dental plan insurance. At January 31, $1,000 of such services was earned but not yet billed to the insurance companies.

Salaries were incurred totaling $800 but not paid at month-end. 

Supplies totaling $600 were purchased on account. 

Prepare the adjusting entries on January 31 for a) service revenue, b) salaries expense, and c) supplies expense. Omit explanations. For each journal entry write Dr. for debit and Cr. for credit.
3. (TCO B) Adjusting Entries: Seymor Stars is the new owner of Night Computer Services. At the end of August 201X, his first month of ownership, Seymor is trying to prepare monthly financial statements. At August 31, Seymor owed his employees $2,900 in wages that will be paid on September 1.

At the end of the month he had not yet received the month’s utility bill. Based on past experience, he estimated that the bill would be approximately $600. 

A telephone bill in the amount of $117 covering August charges is unpaid at August 31. 

You are to prepare the adjusting entries for a) wage expense, b) utilities expense, and c) telephone expense. For each journal entry write Dr. for debit and Cr. for credit.
4. (TCO B) Adjusting Entries: When the accounts of Upside Down Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of annual fiscal period. The prepaid insurance account shows a debit of $6,000, representing the cost of a 2-year fire insurance policy dated August 1 of the current year.

On November 1, Rental Revenue was credited for $3,600, representing revenue from a sub-rental for a 3-month period beginning on that date. 

Interest of $770 has accrued on notes payable. 

1. Prepare the adjusting entry to record the prepaid insurance. For each journal entry write Dr. for debit and Cr. for credit.

2. Prepare the adjusting entry to record the unearned rental revenue.

3. Prepare the adjusting entry to record the accrued interest
5. (TCO B) Adjusting Entries: On April 1, 201X, Jokers Company assigns $600,000 of its accounts receivable to the First National Bank as collateral for a $300,000 loan due July 1, 201X. The assignment agreement calls for Jokers Company to continue to collect the receivables. During the year, Joker collected $450,000 worth of receivables.

Prepare the journal entry for Joker’s collection of $450,000 of the accounts receivable during 201X. For each journal entry write Dr. for debit and Cr. for credit.
6. (TCO B) Adjusting Entries: On February 1, 2010, Wizard Industries purchase $12,000 of merchandise subject to a trade discount of 10% and with credit terms of 3/15/, n/60.

On February 4 it returned $3,000 (gross price before trade or cash discount). The invoice was paid on February 13. Assuming that Wizard uses the periodic method for recording merchandise transactions, record 

1. the purchase, 
2. the return, and 
3. the payment using the gross method. For each journal entry write Dr. for debit and Cr. for credit

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