T.A.

Ho Huu Tin

EXERCISES FOR MIDTERM

Part 1 - Chapter 1 & 2
Types of exercises:
+ Journalize the transactions
+ Post to T-accounts/ledger
+ Prepare unadjusted trial balance
Question 1: At the beginning of August, 2017, Harry James started up a business called
ABC Company. ABC provides custom computer services/solutions. The company had the
following transactions during June:
a. Harry James contribute the capital of $50,000 by the cash of $28,000 and the
office equipment of $22,000.
b. The company purchased land worth $20,000 by paying $5,000 cash and signing a
long-term note payable for $15,000.
c. The company paid $5,000 cash for at two-year insurance policy.
d. The company provided services to a client and immediately collected $4,200 cash.
e. The company completed $4,000 of services for a client. This amount is to be
received within 30 days.
f. The company purchased office equipment of $1,500 on account.
g. The company completed client services for $8,200 on credit.
h. The company collected $5,500 cash in partial payment from the client described
in transaction (g).
i. The company paid $5,500 cash for wages to an assistant.
j. The company paid $1,000 cash for advertisements in the local newspaper during
June.
Required:
1. Journalize the transactions (10 marks).
2. Prepare following T-Accounts and calculate the balances (ending value): Cash,
Accounts Receivable, Prepaid Insurance, Office Equipment, Land, Account

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Payable, Note Payable, Capital, Fees Earned, Advertising Expense and Wages
Expense (10 marks).
3. Prepare an unadjusted trial balance as of the end of August (10 marks).
Question 2: A Gym center was opened on January 1 by Chris Hemsworth. The following
selected events and transaction occurred during January 2017:
a. Jan 1 – Purchased a new piece of land for $30,000 by cash.
b. Jan 4 – Purchased supplies on account, $1,000.
c. Jan 5 – Advertised the opening of the driving range and miniature gym center,
paying advertising expenses of $1,600 in cash.
d. Jan 6 – Paid cash $2,400 for a one-year insurance policy.
e. Jan 10 – Purchased gym equipment for $2,500 from City Gym Company, paid
$500 in cash and the rest will be payable in 30 days.
f. Jan 18 – Received $340 in cash for gym fees earned.
g. Jan 25 – Chris, the owner, withdrew $800 cash.
h. Jan 27 – Provided gym services for $1,000, received $300 in cash, the rest will be
received on Jan 31.
i. Jan 30 – Paid salaries of PT of $250.
j. Jan 30 – Paid City Gym Company in full.
k. Jan 31 – Received $700 in cash for gym services provided on Jan 27.
Required:
1. Journalize the January transactions.
2. Post the January journal entries to the ledger (T-accounts) and calculate the ending
value of each account.
Question 3: At beginning of March, 2017, Snow White started up a business called SW
company. SW provides custom computer service/solutions. The company had the
following transactions during March.
a. Snow White contributed the capital of $45,000 by the cash of $28,000 and the office
equipment of $17,000.
b. The company purchased land worth $24,000 by paying $4,800 cash and signing

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a long-term note payable for $19,200.

c. The company paid $6,600 cash for a two-year insurance policy.
d. The company completed client services for $9,200 on credit.
e. The company collected $4,600 cash in partial payment from the client described
in transaction (d).
f. The company paid $3,200 cash for wages to an assistant.
g. The company paid $800 cash for advertisements in the local newspaper during
March.
Required:
1. Journalize these transactions above and prepare following T-Accounts and calculate
the balances (ending value): Cash, Account Receivable, Prepaid Insurance, Office
Equipment, Land, Note Payable, Capital, Fees Earned, Wage Expense and
Advertising Expense.
2. Prepaid unadjusted trial balance as of the end of March.
Question 4: Power Rangers Company acts as an agent in buying, selling, renting and
managing real estate. The unadjusted trial balance on Sept 30, 2017 is shown as the
following:
Power Rangers Company
Unadjusted Trial Balance
September 30, 2017
Debit Credit
Cash 58,500
Accounts Receivable 3,200
Supplies 900
Prepaid Insurance 1,200
Equipment 6,500
Accounts Payable 4,750
Unearned Rent 0
Common Stocks 48,000
Retained Earnings 20,220
Dividends 5,000
Professional Fees 4,070
Wages Expense 1,500
Miscellaneous Expense 240

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Total 77,040 77,040

The company completed the following transactions to the business during October:
Oct. 2 Purchased office supplies on account of $500.
Oct. 10 Received cash from client on account, $2,000.
Oct. 17 Paid creditors on account, $3,750.
Oct. 29 Paid miscellaneous expenses, $450.
Oct. 30 Record Fees earned and sent bills to clients, $34,000.
Oct. 30 Paid salaries for the month, $1,500.
Oct. 31 Rented land to local merchants for use as a parking lot in November and
December, received cash payment of $4,000 in advance.
Required:
1. Journalize above transactions.
2. Record the above transactions directly into T-accounts and determine the account
balances of T accounts.
3. Prepare an unadjusted trial balance as of Oct 31st, 2017.
Part II - Chapter 3 & 4
Types of exercises:
+ Journalize the adjusting entries
+ Prepare the adjusted trial balance
+ Prepare the financial statements (Balance Sheet, Income Statement, Statement of
Owner’s Equity)
+ Journalize and post the closing entries
+ Prepare post-closing trial balance
Question 1: The following information relates to Nintendo, December 31, 2017. The
company, which uses the calendar year as its annual reporting period, initially records
prepaid and unearned items in balance sheet accounts (assets and liabilities, respectively).
Prepare the adjusting entries on December 31, 2017.

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a. The company’s weekly payroll is $5,000, paid each Friday for 5 workdays.
Assume December 31, 2017, falls on Monday, but the employees will not be paid
their wages until Friday, January 4, 2018.
b. On October 1, 2017, the company agreed to work on a new housing development.
The company is paid $150,000 on October 1 in advance of future installation of
similar alarm systems in 24 new homes. That amount was credit to the Unearned
Services Revenue account. Between October 1 and December 31, work on 20
homes was completed.
c. On September 1, 2017, the company purchased a 12-month insurance policy for
$1,800. The transaction was recorded with $1,800 debit to Prepaid Insurance.
d. On December 29, 2017, the company completed a $7,000 service that has not been
billed and not recorded as of December 31, 2017.
Question 2: The unadjusted trial balance of ABC Company at April 30, 2016, the end of
the current fiscal year, is shown below.
The data needed to determine year-end adjustments are as follows:
a. Laundry supplies on hand at April are $5,000.
b. Depreciation of Equipment during the year is $6,000.
c. Wage accrued but not paid at April 30 are $2,000.
ABC Company
Unadjusted Trial Balance
April 30, 2016
Debit Credit
Cash 8,000
Laundry Supplies 12,000
Laundry Equipment 200,000
Accumulated Depreciation 100,000
Accounts Payable 10,000
ABC, Capital 120,000
Laundry Revenue 40,000
Wages Expense 30,000
Utilities Expense 20,000
Total 270,000 270,000
Required:

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1. Journalize the adjusting entries.

2. Prepare an adjusted trial balance.
3. Prepare an income statement, a statement of owner’s equity (no additional
investment was made during year), and a balance sheet.
4. Journalize and post the closing entries.
5. Prepare a post-closing trial balance.
Question 3: Prince Charming Company, an outfitter store for fishing treks, prepared the
following unadjusted trial balance at the end of its first year of operation:
Prince Charming Co,
Unadjusted Trial Balance
February 28, 2017
Debit Credit
Cash 13,200
Account Receivable 43,800
Supplies 3,600
Equipment 81,000
Account Payable 6,100
Unearned Fees 9,600
Capital 111,400
Drawing 5,000
Fees Earned 147,900
Wage Expense 76,400
Rent Expense 27,500
Utilities Expense 21,000
Miscellaneous Expense 3,500
Total 275000 275000
For preparing the adjusting entries, the following data were assembled:
a. Supplies on hand on February 28 were $750.
b. Fees earned but unbilled on February 28 were $2,900.
c. Depreciation of equipment was estimated to be $5,400 for the year.
d. Unpaid wages accrued on February 28 were $800.
e. The balance in unearned fees represented the February 1 receipt in advance for
services to be provided. Only $1,600 of the services was provided between February
1 and February 28.

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Required:
1. Journalize the adjusting entries necessary on February 28 and prepare an adjusted
trial balance of Prince Charming at the end of the month.
2. Prepare Income Statement, Statement of Owner’s Equity and Balance Sheet.
3. Journalize and post the closing entries.
4. Prepared post-closing trial balance.
Question 4: Use the information of Question 4 in Part I to solve this problem. On Oct 31st,
2017, Power Rangers Company provides the following data for preparing the adjusting
entries:
a. The supplies account balance on Oct 31st, $1,000.
b. Unearned Rent as Oct 31 are $3,000.
c. Insurance expired during Oct is $500.
d. Accrued Fees earned but not record at Oct 31st is $1,150.
e. Depreciation of equipment during the month is $600.
Required:
1. Journalize the adjusting entries.
2. Prepare adjusted trial balance.
3. Prepare Income Statement, Statement of Owner’s Equity and Balance Sheet.
4. Journalize and post the closing entries.
5. Prepared post-closing trial balance.
Part III – Chapter 6
Types of exercise: Journalize the transactions of merchandising business.
Question 1: Prepare journal entries to record the following merchandise transaction both
the seller (Uncharted) and the buyer (Hitman).
a. May 4 – Uncharted sold $1,500 of merchandise on account to Hitman, term FOB
shipping point n/45, invoice dated May 4. The cost of merchandise sold was $900.
b. May 6 – Hitman paid transportation charges of $30 on the May 4 purchase from
Uncharted,

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c. May 8 – Uncharted sold $1,000 of merchandise on account to Hitman, terms FOB

destination, n/30, invoice dated May 8. The cost of merchandise sold was $700.
d. May 10 – Uncharted paid transportation costs of $50 for delivery of merchandise
sold to Hitman on May 8.
e. May 16 – Uncharted issued Hitman a $200 credit memorandum for merchandise
returned. The merchandise was purchased by Hitman on account on May 8. The
cost of merchandise returned was $140.
f. May 18 – Uncharted received payment from Hitman for purchase of May 8.
g. May 21 – Uncharted sold $2,400 of merchandise on account to Hitman, terms
FOB shipping point, 2/10, n/eom. Uncharted prepaid transportation costs of $100,
which were added to the invoice. The cost of merchandise was $1,440.
h. May 31 – Uncharted received payment from Hitman for purchase of May 21, less
discount.
Question 2: The following selected transactions were completed during September 2016
between Apple and Samsung:
a. Sept 2 – Apple sold merchandise on account to Samsung, $20,000, terms FOB
shipping point, 2/10, n/30. Apple paid freight of $675, which was added to the
invoice. The cost of merchandise sold was $12,000.
b. Sept 8 – Apple sold merchandise on account to Samsung, $34,750, terms FOB
destination, 1/15, n/eom. The cost of merchandise sold was $19,850.
c. Sept 8 – Apple paid freight of $800 for delivery of merchandise sold to Samsung
on Sept 8.
d. Sept 11 – Samsung returned $5,750 of merchandise purchased on account on Sept
8 from Infinity Company. The cost of merchandise returned was $3,000.
e. Sept 11 – Apple sold merchandise on account to Samsung, $31,800, terms FOB
shipping point, 1/15, n/eom. The cost of merchandise sold was $20,500.
f. Sept 12 – Samsung paid Apple for purchase of Sept 2.
g. Sept 23 – Samsung paid Apple for purchase of Sept 8.
h. Sept 30 – Samsung paid Apple on account for purchase of Sept 11.

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Required: Journalize the September transactions for (1) Apple and (2) Samsung.
Question 3: The following selected transactions were completed during August between
Evil Queen (EV) Company and Maleficent (M) Company.
August 1. EV Company sold merchandise on account to M, $28,600, term FOB
destination, 2/15, n/eom. The cost of merchandise sold was $17,000.
August 2. EV Company paid freight of $500 for delivery of merchandise sold to
M on August 1.
August 5. EV Company sold merchandise on account to M, $18,000, terms FOB
shipping point, n/eom. The cost of merchandise sold was $10,800.
August 6. EV issued credit memo for $1,600 to M for merchandise returned from
sale on account on August 1. The cost of the merchandise returned was $960.
August 9. M paid freight of $350 on August 5 purchase from EV Company.
August 15. EV Company sold merchandise on account to M, $36,200, terms FOB
shipping point, 1/10, n/30. EV paid freight of $900, which was added to invoice. The cost
of the merchandise sold was $19,600.
August 16. M paid EV for purchase of August 1, less discount and less return of
August 6.
August 18. EV sold merchandise for $21,800 plus 10% sales tax to M who used
Mastercard. The cost of merchandise sold was $13,000.
August 20. EV sold merchandise for $10,000 plus 10% sales tax to M and received
cash immediately. The cost of merchandise sold was $6,000.
August 22. EV sold merchandise for $15,000 with 40% trade discount to M and
received cash immediately. The cost of merchandise sold was $7,000.
August 25. M paid EV on account for purchase of August 15, less discount.
August 31. M paid EV Company on account for purchase of August 5.
August 31. EV paid Disney Bank $1,150 for service fees for handling MasterCard
and paid off to state sales tax division for taxes owned on sales during August.
Required: Journalize the August transactions for (1) EV Company and (2) M
Company.

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Question 4: The following selected transactions were completed during July, 2017
between Dell and Acer Company:
Jul. 2 Dell sold merchandise on account to Acer, $14,000, terms FOB shipping
point, 2/10, n/30. Dell prepaid transportation costs of $350, which were added to the
invoice. The cost of merchandise sold was $8,000.
Jul. 8 Dell sold merchandise on account to Acer, $12,500, terms FOB destination,
1/15, n/eom. The cost of merchandise sold was $7,500.
Jul. 8 Del paid transportation costs of $550 for delivery of merchandise sold to
Acer on Jul. 8.
Jul. 12 Acer returned $3,000 of merchandise purchased on account on Jul. 8 from
Dell. The cost of merchandise returned was $1,800.
Jul. 12 Acer paid Dell for purchase of Jul. 2.
Jul 23. Acer paid Dell for purchases of Jul. 8
Jul. 24 Dell sold merchandise on account to Acer, $10,000, terms FOB shipping
point, n/eom. The cost of merchandise sold was $6,000.
Jul. 26 Acer paid transportation charges of $310 on Jul. 24 purchase.
Jul. 30 Acer paid Dell on account for purchase of Jul. 24.
Required: Journalize the Jul. transaction for both Companies.

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