PRINCIPLES OF ACCOUNTING

MIDTERM EXAM – SUM 2022

Lecturer: Truong Thi Thu Thuy

Q1:
Using the table below, indicate the impact of the following errors made during the adjusting
entry process. Use a "+" for overstatements, a "-" for understatements, and a "0" for no effect.
The first one is provided as an example.
Q2:
Bella Beauty Salon's unadjusted trial balance for the current year follows:

Additional information:
(a) An insurance policy examination showed $1,240 of expired insurance.
(b) An inventory count showed $210 of unused shop supplies still available.
(c) Depreciation expense on shop equipment, $350.
(d) Depreciation expense on the building, $2,220.
(e) A beautician is behind on space rental payments, and this $200 of accrued revenues was
unrecorded at the time the trial balance was prepared.
(f) $800 of the Unearned Rent account balance was earned by year-end.
(g) The one employee, a receptionist, works a five-day workweek at $50 per day. The
employee was paid last week but has worked four days this week for which she has not been
paid.
(h) Three months' property taxes, totalling $450, have accrued. This additional amount of
property taxes expense has not been recorded.
(i) One month's interest on the note payable, $600, has accrued but is unrecorded.

A. Based on the above information, prepare the adjusting journal entries for Bella's Beauty
Salon.
B. Use the above information to prepare the adjusted trial balance for Bella's Beauty
Salon.
Q3:
The unadjusted trial balance of E. Pace, Consultant is entered on the partial work sheet below.
Complete the work sheet using the following information:

(a) Salaries earned by employees that are unpaid and unrecorded, $500.
(b) An inventory of supplies showed $800 of unused supplies still on hand.
(c) Depreciation on equipment, $1,300.
Q4:
Presented below are the year-end balances on December 31 of Laura's Laundry Service.
(All accounts have normal balances.)

A. Prepare the necessary closing entries on December 31.

B. Prepare a post-closing trial balance on December 31.
Q5:
Prepare journal entries to record the following merchandising transactions of Dean Company,
which applies the perpetual inventory system. Dean Company offers all of its credit customers
credit terms of 2/10, n/30.
Q6:

A. From the above adjusted trial balance for the Worker Products Company, prepare a
multiple-step income statement in good form.
B. From the above adjusted trial balance for Worker Products, prepare the necessary
closing entries.
Q7:
The following information is available for Trico and its two main competitors in the industry
(Duco and Unico):

The industry standard for the current ratio is 1.8 and the industry standard for the acid-test ratio
is 1.

Required:
A. Calculate the current ratio and acid-test ratio for each firm.
B. Rank the firms in decreasing order of liquidity.
C. Comment on Trico's relative liquidity position.

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