FINAL ASSIGNMENT
Course number and title
074702 - Principles of Accounting
Class
20BBAV01
Submit Date
25/05/2022
Problem 1 (2 marks):
Eileen Newan is a licensed CPA. During the first month of operations of her business, the following
events and transactions occurred.
May
1 Eileen Newan invested $20,000 cash in her business.
2 Hired a secretary-receptionist at a salary of $2,000 per month.
3 Purchased $2,500 of supplies on account from Stationery Supplies
Company.
7 Paid office rent of $900 cash for the month.
11 Completed a tax assignment and billed client $3,200 for services provided.
12 Received $3,500 advance on a management consulting engagement.
17 Received cash of $1,200 for services completed for Sands Security Co.
31 Paid secretary-receptionist $2,000 salary for the month.
31 Paid 60% of balance due Stationery Supplies Company.
Eileen uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126
Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner’s Capital,
No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.
Required:
(a) Journalize the transactions.
(b) Post to the ledger accounts.
(c) Prepare a trial balance on May 31, 2012.
Problem 2 (2 marks):
Meridien Motel opened for business on June 1 with eight air-conditioned units. Its trial balance
before adjustment on August 31 is as follows.
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FINAL ASSIGNMENT
MERIDIEN MOTEL
Trial Balance
August 31, 2012
Account Number
101
Cash
126
Supplies
130
Prepaid Insurance
140
Land
143
Buildings
149
Equipment
201
Accounts Payable
208
Unearned Rent Revenue
275
Mortgage Payable
301
Owner’s Capital
306
Owner’s Drawings
429
Rent Revenue
622
Maintenance and Repairs Expense
726
Salaries and Wages Expense
732
Utilities Expense
Debit
$ 19,600
3,300
6,000
25,000
125,000
26,000
Credit
$ 6,500
7,400
80,000
100,000
5,000
80,000
3,600
51,000
9,400
$273,900
$273,900
In addition to those accounts listed on the trial balance, the chart of accounts for Meridien Motel
also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144
Accumulated Depreciation—Buildings, No. 150 Accumulated Depreciation—Equipment, No. 212
Salaries and Wages Payable, No. 230 Interest Payable, No. 620 Depreciation Expense, No. 631
Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.
Other data:
1. Insurance expires at the rate of $300 per month.
2. A count on August 31 shows $800 of supplies on hand.
3. Annual depreciation is $6,000 on buildings and $2,400 on equipment.
4. Unearned rent revenue of $4,800 was earned prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $4,000 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)
Required:
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and
post the adjusting entries. (Use J1 as the posting reference.)
(c) Prepare an adjusted trial balance on August 31.
(d) Prepare an income statement and an owner’s equity statement for the 3 months ending
August 31 and a balance sheet as of August 31.
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FINAL ASSIGNMENT
Problem 3 (2 marks):
DTP Book Store distributes hardcover books to retail stores and extends credit terms of 2/10, n/30 to
all of its customers. At the end of May, DTP’s inventory consisted of books purchased for $1,800.
During June, the following merchandising transactions occurred.
June
1 Purchased books on account for $1,600 from Youth Publishers, FOB
destination, terms 2/10, n/30. The appropriate party also made a cash
payment of $50 for the freight on this date.
3 Sold books on account to TNI Chain for $2,500. The cost of the books sold
was $1,440.
6 Received $100 credit for books returned to Youth Publishers.
9 Paid Youth Publishers in full, less discount.
15 Received payment in full from TNI Chain.
17 Sold books on account to Suset Books for $1,800. The cost of the books
sold was $1,080.
20 Purchased books on account for $1,500 from Education Publishers, FOB
destination, terms 2/15, n/30. The appropriate party also made a cash
payment of $50 for the freight on this date.
24 Received payment in full from Suset Books.
26 Paid Education Publishers in full, less discount.
28 Sold books on account to Reading Cafe for $1,400. The cost of the books
sold was $850.
30 Granted Reading Cafe $120 credit for books returned costing $72.
DTP Book Store’s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts
Receivable, No. 120 Inventory, No. 201 Accounts Payable, No. 401 Sales Revenue, No. 412 Sales
Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.
Required:
Journalize the transactions for the month of June for DTP Book Store using a perpetual inventory
system.
Problem 4 (2 marks):
In recent years, Mekong Carrier purchased three used buses. Because of frequent turnover in the
accounting department, a different accountant selected the depreciation method for each bus, and
various methods were selected. Information concerning the buses is summarized below.
Bus
Acquired
1
2
3
01/01/2010
01/01/2010
01/01/2011
Cost
$ 96,000
120,000
80,000
Salvage Value
$ 6,000
10,000
8,000
Useful Life
in Years
5
4
5
Depreciation Method
Straight-line
Declining-balance
Units-of-activity
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FINAL ASSIGNMENT
For the declining-balance method, the company uses the double-declining rate. For the units of
activity method, total miles are expected to be 120,000. Actual miles of use in the first 3 years were:
2011, 24,000; 2012, 34,000; and 2013, 30,000.
Required:
(a) Compute the amount of accumulated depreciation on each bus at December 31, 2012.
(b) If bus no. 2 was purchased on April 1 instead of January 1, what is the depreciation expense
for this bus in (1) 2010 and (2) 2011?
Problem 5 (2 marks):
At December 31, 2011, VAG JSC. reported the following information on its balance sheet.
Accounts receivable
Less: Allowance for doubtful accounts
$960,000
80,000
During 2012, the company had the following transactions related to receivables.
1. Sales on account $3,200,000
2. Sales returns and allowances 50,000
3. Collections of accounts receivable 2,810,000
4. Write-offs of accounts receivable deemed uncollectible 90,000
5. Recovery of bad debts previously written off as uncollectible 24,000
Required:
(a) Prepare the journal entries to record each of these five transactions. Assume that no cash
discounts were taken on the collections of accounts receivable.
(b) Enter the January 1, 2012, balances in Accounts Receivable and Allowance for Doubtful
Accounts, post the entries to the two ledger accounts, and determine the balances.
(c) Prepare the journal entry to record bad debts expense for 2012, assuming that an aging of
accounts receivable indicates that expected bad debts are $115,000.
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