Accounting 110 - Practice Exam W/ Answers

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Camosun College Financial Accounting Acct110 PRACTICE Final Exam

B. Edwards

Name: ____________________________________________________________

___________________ Question One: A/R and Bad debts (15 minutes) Read each transaction and record the appropriate journal entry for Morrison Consultants, which has a June 30 year end. Explanations are NOT required. 1. On June 30 2011, Morrison prepares an aging schedule of accounts receivable that shows estimated uncollectible accounts of $5,200. Before journal entries, the Allowance for Doubtful accounts has a debit balance of $300 and Accounts Receivable has a balance of $85,000. 2. On July 5, Morrison was notified that Sperry Ltd has declared bankruptcy and Morrison writes off its A/R of $800. 3. On September 12, Sperry notifies Morrison that it can pay its $800 debt and includes a cheque for the entire amount. Date Account Debit Credit

Calculations:

What is the net realizable value of the accounts receivable at June 30, 2011? _______________ What is the net realizable value of the accounts receivable at July 5, 2011? _______________

There is no representation that the practice questions reflect the actual exam questions.

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Camosun College Financial Accounting Acct110 PRACTICE Final Exam

B. Edwards

Question Two: Capital Assets and amortization. (30 minutes)
Townsend Engineers owns a piece of machinery that it purchased 3 years ago for $40,000. The machinery has an estimated salvage value of $5,000 and an estimated useful life of 10 years. Straight-line amortization is used. At December 31, 2010, the accumulated amortization account had a balance of $10,500. On April 1, 2012 Townsend sold the machinery for $27,000. 1. Record the amortization on December 31, 2011. 2. Record all of the necessary journal entries to record the sale of machinery on April 1, 2012. Date Account Debit Credit

Calculations:

There is no representation that the practice questions reflect the actual exam questions.

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Camosun College Financial Accounting Acct110 PRACTICE Final Exam

B. Edwards

Question Two: continued. Townsend bought new machinery at a cost of $90,000 on April 1, 2011. Installation costs for the machinery was $10,000. The business signed a note for $100,000 to pay for the machinery cost and the installation. The machinery has a 5-year useful life and residual value of $8,000. The business uses the double declining balance method for this machinery. Record the journal entries for the following transactions. 1. the purchase of the machinery on April 1, 2011 2. Dec 31, 2011 amortization 3. The accrual of the interest on the note at 5% interest at December 31, 2011 4. The payment of the interest and $10,000 loan payment on March 31, 2012 5. Dec 31, 2012 amortization Date Account Debit Credit

Calculations:

There is no representation that the practice questions reflect the actual exam questions.

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Camosun College Financial Accounting Acct110 PRACTICE Final Exam

B. Edwards

Question Three: Adjusting Journal Entries (15 minutes)
Write the necessary adjusting journal entries for Cassie Services for the year ended June 30, 2011 in the space provided below and on the next page. Explanations are NOT required. 1. The Supplies asset account shows a balance of $1,500 but a physical count on June 30 shows only $300 of supplies. 2. The 1 year insurance policy premium was paid on May 1 for $3,600 and Prepaid Insurance was debited. 3. On June 1, Cassie Services received $1,200 for 2 months rent from another business which is renting a small building from Cassie for 6 months. Cassie credited Unearned rent revenue. 4. Cassie performed services for a client for $900 but has not yet billed the client or recorded the transaction. 5. Cassie pays employees $2,000 per 5-day work week ending Friday and June 30 falls on a Wednesday. 6. The business owns a van that cost $18,000 and has an estimated useful life of 6 years and no salvage value....
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