Additional Accounting Exercises - ANSWERS

SME-Dr. Carr

1. Indicate whether each of the following items is an asset, liability, or part of equity:

a. Accounts Receivable: Asset f. Salary Payable: Liability

b. Utility Expense: Equity g. Cash: Asset

c. Equipment: Asset h. Retained Earnings: Equity

d. Deferred Revenue: Liability i. Notes Payable: Liability

e. Sales: Equity j. Dividends: Equity

2. Which of the accounts above are temporary accounts that will be closed out to equity:

b. Utility Expense
e. Sales
j. Dividends

3. Below is specific information relating to Jake Company’s general ledger accounts:

Accounts Payable………….3,000 Equipment………………….……….29,000

Cash…………………….….….4,500 Notes Payable…………….….…...25,000
Advertising Expense………6,000 Dividends…………………….……....7,500
Salary Expense…………...16,500 Rent Expense….………….……….10,500
Revenue………………..……51,500 Accounts Receivable………….….13,500
Retained Earnings Beginning of the Year, prior to closing of accounts to it….8,000

a. Calculate Jake Company’s assets based on the balances above

Cash 4,500 + Equipment 29,000 + Accounts Receivable 13,500 = Total Assets of 47,000

b. Calculate Jake Company’s net income based on the balances above

Revenue 51,500 – Advertising Expense 6,000 – Salary Expense 16,500 – Rent Expense 10,500 =
Net income of 18,500

c. Calculate Jake Company’s liabilities based on the balances above

Accounts Payable 3,000 + Notes Payable 25,000 = Total Liabilities of 28,000

d. Calculate Jake Company’s equity based on the balances above

Retained earnings 8,000 + Net income of 18,500 – Dividends of 7,500 =
Ending Retained Earnings of 19,000

e. Is Jake Company’s balance sheet in balance? Verify using the accounting equation.
Total Assets of 47,000 = Total Liabilities of 28,000 + Total Equity of 19,000

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Additional Accounting Exercises - ANSWERS
SME-Dr. Carr

Inventory Exercise:

1. Rickety Company purchased $1,000 widgets and has $200 widgets in its ending
inventory. If Rickety began the year with $500 widgets, what amount of widgets
were sold during the year? In other words, what is Rickety’s COGS:

a. $1,000
b. $1,500
c. $1,200
d. $1,300 (Beginning Inventory plus purchases less ending inventory = COGS)

2. Use the following data for the following 3 questions:

Units Unit Cost Total Cost

Beginning Inventory 100 $10 $1,000
‘Jan 8 purchase 80 $11 880
Ending inventory is 60 units

1. The number of units sold were

a. 120
b. 240
c. 100
d. 180

2. Using FIFO inventory costing method, the cost per unit of the 60 units in ending
inventory would be

a. $10
b. $11
c. $10.50
d. Cannot be determined from this information.

3. Using the LIFO inventory costing method, the cost per unit of the 60 units in
ending inventory would be

a. $10
b. $11
c. $10.50
d. Cannot be determined from this information.

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