Exam 1 Review

Topics: Generally Accepted Accounting Principles, Revenue, Accounts receivable Pages: 5 (759 words) Published: September 18, 2013
ACC 301
Review Sheet
Exam #1 – Spring 2012

Problem #1

Gerdes Psychological Services, Inc., closes its temporary accounts once each year on December 31. The company recently issued the following income statement as part of its annual report.

GERDES PSYCHOLOGICAL SERVICES, INC.
Income Statement
For the Year Ended December 31, 2007

Revenue:Counseling revenue…………………………….| | $225,000| Expenses:| | |
Advertising expense…………………………...| $ 1,800| | Salaries expense……………………………….| 94,000| | Office supplies expense……………………….| 1,200| | Utilities expense……………………………….| 850| | Malpractice insurance expense………………..| 6,000| | Office rent expense……………………………| 24,000| | Continuing education expense………………...| 2,650| | Depreciation expense: fixtures………………...| 4,500| | Miscellaneous expense………………………...| 6,000| | Income taxes expense………………………….| 29,400| 170,400| Net income……………………………………….| | $ 54,600|

The firm’s statement of retained earnings indicates that a $6,000 cash dividend was declared and paid during 2007. Prepare the necessary closing entries on December 31, 2007.

Problem #2

 E3-1B| (Transaction Analysis—Service Company) Brown is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. | | |

April| | |
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 | 3| Purchased supplies on account $1,610.|
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 | 11| Completed a tax assignment and billed client $2,530 for services rendered. |  | 12| Received $7,360 advance on a management consulting engagement.|  | 17| Received cash of $5,290 for services completed for Calunga Co.|  | 21| Paid insurance expense $253.|

 | 30| Owe the secretary-receptionist $2,668 for the month.|  | 30| A count of supplies indicated that $276 of supplies had been used.|  | 30| Purchased a new computer for $14,030|
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(LO 4)|
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InstructionsJournalize the transactions in the general journal. (Omit explanations.)Problem #3| |
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 E3-3B  | (Corrected Trial Balance) The trial balance of Cervantes Corporation, below, does not balance. | | |
CERVANTES CORPORATIONTRIAL BALANCEAPRIL 30, 2010|  | Debit| Credit|
Cash| $11,824|  |
Accounts Receivable| 10,480|  |
Supplies on Hand| 5,934|  |
Furniture and Equipment| 12,200|  |
Accounts Payable|  | $14,088|
Common Stock|  | 16,000|
Retained Earnings|  | 4,000|
Service Revenue|  | 10,400|
Office Expense| 8,640|  |
 | $49,078| $44,488|
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An examination of the ledger shows these errors. | 1.  | Cash received from a customer on account was recorded as $2,760 instead of $3,660.| |
2.  | The purchase on account of a computer costing $6,400 was recorded as a debit to Office Expense and a credit to Accounts Payable.| |
3.  | Services were performed on account for a client, $4,500, for which Accounts Receivable was debited $4,500 and Service Revenue was credited $450.| |
4.  | A payment of $190 for telephone charges was entered as a debit to Office Expenses and a debit to Cash.| |
5.  | The Service Revenue account was totaled at $10,400 instead of $10,560.|
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(LO 4)|
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InstructionsFrom this information prepare a corrected trial balanceProblem #4| |
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 E3-5B  | (Adjusting Entries) The ledger of Chan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. | | |
 | Debit| Credit|
Prepaid Insurance| $  2,700|  |
Supplies| 2,100|  |
Equipment| 18,750|  |
Accumulated Depreciation—Equipment|  | $ 6,300|
Notes Payable|  | 15,000|
Unearned Rent Revenue|  | 6,975|
Rent Revenue|  | 45,000|
Interest Expense| –0–  |  |
Wage Expense|...
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