MEMBA BUS 512M First Class
1. Indicate below whether each of the following accounts is a Current Asset (CA), Investment
(INVT), Property, Plant, & Equipment (PPE), Intangible Asset (IA), Current Liability (CL), Longterm Liability (LTL), Contributed Capital (CC), Retained Earnings (RE), a Revenue (R), Cost of
Goods Sold (COGS), Operating Expenses (OE), Other Revenues & Expenses (ORE), or Income
Taxes Expense (ITE) AND indicate below whether each account would be shown on the income
statement (IS), a statement of retained earnings (RE), or the balance sheet (BS). Hint: some
accounts may be on more than one Financial Statement.
CA, INVT, PPE, IA,
CL, LTL,
CC, RE,
R, COGS, OE, ORE, ITE
Appears on
Income Statement,
Statement of Retained
Earnings, and/or
Balance Sheet
ACCOUNT
Automobile
Accounts payable
Cash
Sales Returns and Allowances
Dividends or Dividends Declared
Fares Earned
Rent Expense
Utilities Expense
Supplies
Retained Earnings
Sales
Delivery Expense
Interest Expense
Unearned Revenue or Deferred Revenue
Cost of Goods Sold
Depreciation Expense
Accumulated Depreciation
Trademark
Marketable Securities or Short-term Investments
Investment held more than 1 year or Long-term
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MEMBA BUS 512M First Class
Investments
Accounts Receivable
Accrued Expenses Payable
Prepaid Expenses
Inventory or Merchandise Inventory
Amortization Expense
Goodwill
Bad Debt Expense
Allowance for Bad Debts
Common Stock
Paid in Capital
Cost of Sales
Dividends Payable
Income Tax Expense
Income Taxes Payable
Prepaid Rent
Supplies Expense
Notes Payable due in more than a year
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MEMBA BUS 512M First Class
2. The MEMBA Company had a balance of $180,000 in Retained Earnings on December 31, 20X1.
During 20X2, the company had a net income of $15,000, and dividends of $12,000. Prepare the
company's statement of retained earnings for the year ended December 31, 20X2.
3. Use the following information to calculate at, or for the year ended, December 31, 20XX (a) cash,
(b) net income, (c) retained earnings, and (d) total assets.
Salaries expense
$4,000 Commissions Earned
Accounts payable
$7,000
Dividends
$6,000 Utilities expense
Accounts receivable
$8,000 Inventories
Retained Earnings December 31,
20XX
Cash
a= ?
Salaries Payable
Net income
b= ?
Retained Earnings January 1, 20XX
Total assets
d= ?
Common stock
$20,000
c= ?
$2,000
$22,000
$1,000
$25,000
$1,000
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MEMBA BUS 512M First Class
4. Selected ledger accounts used by MEMBA Inc. are listed along with identifying numbers.
Following the list of account numbers and titles is a series of transactions. For each transaction,
you are to indicate the proper accounts to be debited and credited by placing the appropriate
account numbers in the space provided.
1 Cash
7 Accounts payable 12 Fees earned
2 Accounts receivable
8 Mortgage payable 13 Salaries expense
3 Office supplies
9 Unearned fees
14 Office supplies expense
4 Prepaid insurance
10 Common stock
15 Insurance expense
5 Office equipment
11 Dividends
16 Rent expense
6 Accumulated depreciation
Transactions:
17 Depreciation expense
Account(s)
debited
Account(s)
credited
Paid rent on building.
Received an advance payment from a client for
services to be rendered over next six months.
Paid salaries of employees
Bought a three-year insurance policy and paid in
full.
Performed services for a client; received part of
fee in cash, remainder to be collected in 30
days.
Purchased office equipment. Paid part in cash,
balance payable in 60 days.
Purchased a large amount of office supplies on
credit.
The owners invested cash in the corporation
and received stock.
Made an adjusting entry for the portion of the
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MEMBA BUS 512M First Class
insurance premium which has expired.
Paid off office supplies purchased earlier.
Made an adjusting entry for depreciation.
Made an adjusting entry for office supplies used
during this period.
Made an adjusting entry to recognize that a
portion of the fee received in advance had been
earned.
5. Using T-accounts for: Accounts payable, Cash, Common stock, Dividends, Rent expense,
Repair equipment, Repair fees earned, Salaries expense, and Supplies; record the following
transactions for the month of June directly into the T-accounts. Use the letter to identify the
transaction. Determine the balance in each account.
a. Mem Ba opened the MEMBA Repair Service by investing $4,300 in cash and $1,600 in
repair equipment for shares of common stock.
b. Paid $400 for current month's rent.
c. Purchased repair supplies on credit, $500.
d. Purchased additional repair equipment for cash, $300.
e. Paid salary to a helper, $450.
f. Paid $200 of amount purchased on credit in c.
g. Paid $600 dividends from business.
h. Accepted cash for repairs completed, $860.
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MEMBA BUS 512M First Class
6. Prepare the year-end adjusting entries for each of the following:
a. Office Supplies had a balance of $168 on January 1. Purchases debited to Office Supplies
during the year amount to $830. A year-end inventory reveals supplies of $570 on hand.
b. Depreciation of office equipment is estimated to be $4,260 for the year.
c. Property taxes for six months, estimated at $1,750, have accrued but have not been recorded.
d. Unrecorded interest receivable on U.S. government bonds is $1,700.
e. Unearned Revenue has a balance of $1,800. Services for $600 received in advance have now
been performed.
f. Services totaling $400 have been performed; the customer has not yet been billed.
7. Prepare year-end adjusting entries for each of the following situations:
a. The Store Supplies account showed a beginning balance of $100 and purchases of $700. The
ending balance was $200.
b. Depreciation on buildings is estimated to be $4,200.
c. A one-year insurance policy was purchased for $1,800. Nine months have passed since the
purchase.
d. Accrued interest on notes payable amounted to $50.
e. The company received a $2,400 advance payment during the year on services to be
performed. By the end of the year, one-third of the services had been performed.
f. Payroll for the five-day workweek, to be paid on Friday, is $2,500. The last day of the period is a
Tuesday.
g. Services totaling $360 had been performed but not yet received or recorded.
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MEMBA BUS 512M First Class
8.
What are the two closing journal entries and in what order do you prepare them?
9.
What date are adjusting and closing entries prepared?
10.
Prepare the closing journal entries from the following Adjusted Trial Balance?
Accounts Payable
Accounts Receivable
Accumulated Depreciation
Building
Cash
Common Stock
Depreciation Expense
Design Income
Dividends
Income Taxes Expense
Income Taxes Payable
Office Supplies
Office Supplies Expense
Prepaid Rent
Rent Expense
Unearned Income
Utilities Expense
Wages Expense
Wages Payable
Total
$62,800
$50,000
$3,000
$163,200
$220,480
$400,000
$3,000
$136,000
$28,000
$8,000
$8,000
$36,600
$15,400
$16,000
$16,000
$1,680
$6,800
$55,200
$618,680
$7,200
$618,680
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MEMBA BUS 512M First Class
11.
List the formula for the following ratios. State if ratio an indicator of Liquidity, Profitability, or
Long-term Solvency. For the transactions listed in the table below, indicate their impact
(increase, decrease, not change) on the ratios.
Working Capital
Current Ratio
Asset Turnover
Profit Margin
Return on Assets
Debt to Equity
Earnings per Share
Transactions:
Working
Capital
Current Asset
Ratio Turnover
Profit
Margin
Debt
to
Equity
Earnings
per Share
Paid rent on building.
Received an advance
payment from a client
for services to be
rendered over next
six months.
Paid salaries of
employees
Bought a three-year
insurance policy and
paid in full.
Performed services
for a client; received
part of fee in cash,
remainder to be
collected in 30 days.
Purchased office
equipment. Paid part
in cash, balance
payable in 60 days.
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MEMBA BUS 512M First Class
Purchased a large
amount of office
supplies on credit.
The owners invested
cash in the
corporation and
received stock.
Made an adjusting
entry for the portion
of the insurance
premium which has
expired.
Paid off office
supplies purchased
earlier.
Made an adjusting
entry for depreciation.
Made an adjusting
entry for office
supplies used during
this period.
Made an adjusting
entry to recognize
that a portion of the
fee received in
advance had been
earned.
List the formula for the following cash flow related ratios:
Free Cash Flow
Cash Conversion Cycle
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