Revision for final exam:

Part I: MULTIPLE CHOICE QUESTIONS (3 Points-0,15p/correct answer)

Study MCQ in the book, at the end of every chapter.

Cover: Chapter 1,2,3,4,5,6,9

Chapter 1

1
2
Chapter 2

3
Chapter 3

4
5
6
Chapter 4

7
8
Chapter 5

9
10
Chapter 6

11
12
Chapter 9: study for 3 methods of depreciation

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PART 2: OPEN QUESTIONS (Total: 7 points) Cover Chapter 5,6,9

Questions 1

Lazy River Resort opened for business on May 1, 2020. Its trial balance before adjustment on May 31 is as follows.

In May 31:

1. Prepaid insurance is a 1-year policy starting May 1, 2020.

2. A count of supplies shows €750 of unused supplies on May 31.
3. Annual depreciation is €3,600 on the buildings and €1,500 on equipment.
4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)
5. $2,200 of the unearned rent revenue is recognized as revenue.
6. Salaries of €750 are accrued and unpaid at May 31.

Requirement

a. Journalize the adjusting entries on May 31.

b. Post to ledger of adjusting entries

c. Prepare an adjusted trial balance on May 31.

d. Prepare closing entries

e. Prepare post-closing trial balance at May 31.

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Questions 2

The inventory of ABC company and data on purchases and sales for a three-year period follow.
The company closes its books at the end of each year at Dec 31. It uses the perpetual inventory
system.

Year Month Description Unit Cost per unit ($ )

2020 Jan Beginning inventory 20 20
Mar Purchase 100 21
Oct Sales 90
Dec Ending Inventory ?
2021 Feb Purchase 60 24
May Purchase 70 25
Nov Sales 110
Dec Ending Inventory ?
2022 Feb Purchase 10 26
June Purchase 200 27
Aug Sale 160
Dec Ending Inventory ?

Required: Determine the cost of ending inventory and cost of goods sold for three years:

- Using the FIFO method

- Using average -cost method

What if the company uses the periodic inventory system?

Questions 3: In recent years, XTX Company purchased three used Truck. Various depreciation
methods were selected for each Truck. Information concerning the Truck is summarized below:

Purchase Residual Useful Life in Depreciation

Truck day Cost Value years Method
1 1/4/2020 $65,000 $5,000 5 Straight-line
2 1/7/2020 $90,000 $10,000 4 Declining-Balance
3 1/10/2021 $66,000 $6,000 3 Units-of-activity

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
were: 2021 is 15,000; 2022 is 35,000, and 2023 is 45,000 and 2024 is the rest

Required:

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a, Compute the amount of accumulated depreciation on each Truck at December 31, 2023

b, If the Truck 1 is sold for $40,000 after Year 2. What would be the amount of gain or loss?

Question 4

Anya’s Cleaning Service has the following information on July 1, 2020: Cash 20,000; Supplies
5,000, Share capital $15,000; Retained earnings 10,000

During July, the following transactions were completed.

July 1 Purchased an equipment for €12,000, paying €4,000 cash and the balance on account.

July 3 Purchased cleaning supplies for €2,100 on account.

July 5 Paid €1,800 cash on a 1-year insurance policy effective July 1.

July 7 Billed customers €4,500 for providing cleaning services.

July 10 Paid €1,500 cash on amount owed on equipment and €1,400 on amount owed on
cleaning supplies.

July 17 Paid €2,800 cash for employee salaries.

July 30 Declared and paid a €5,600 cash dividend.

Requirement

a. Journalize the July transactions.

b. Prepare adjusting entries at July 31:

1. Unbilled and uncollected revenue for services performed at July 31 were €2,700.

2. Depreciation on equipment for the month was €500.

3. One-twelfth of the insurance expired.

4. An inventory count shows €600 of cleaning supplies on hand at July 31.

5. Accrued but unpaid employee salaries were €1,000.

c. Prepare adjusted trial balance

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