CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS Problems 2-1 Laurence Company a.. Merchandise Inventory 480,000 Purchase Returns and Allowances 25,000 b... Doubtful Accounts Expense 1,700 All
Trang 1CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS
Problems
2-1 (Laurence Company)
a Adjusting entries at December 31, 2007:
25,000-8,500
24,000 x 8/24
27,000/3
(360,000/10) x 10/12
e Uncollectible Accounts Expense 9,000 Allowance for Uncollectible Accounts 9,000 2% x 450,000
200,000 x 12 x 30/360
g Merchandise Inventory 480,000 Purchase Returns and Allowances 25,000
b Reversing entries at January 1, 2008
2-2 (Matthew Company)
Adjusting entries at December 31, 2007:
21,000 x 2/5
Accumulated Depreciation 35,000
Trang 2420,000 / 12
60,000 x 12 x 3/12
Allowance for Bad Debts 32,500 5% x 650,000
g Prepaid Travel Expense (or Prepaid Expense) 3,100
18,000 x 2/6
Reported net income 1,352,000 Adjustments: (a) ( 8,400) (b) ( 35,000) (c) 1,800 (d) ( 5,250) (e) ( 32,500) (f) ( 5,280) (g) 3,100 (h) 6,000 Correct net income 1,276,470 x 35% =446,765 2-3 (De Asis Corporation)
a Adjusting entries at December 31, 2007:
a Doubtful Accounts Expense 1,700 Allowance for Doubtful Accounts 1,700
Accumulated Depreciation 25,000
Trang 3f Salary Expense 8,000
b Closing entries (partial)
Doubtful Accounts Expense 1,700
c Reversing entries at January 1, 2008
h Unearned Rent Revenue 20,000
2-4 (JPIA Company)
Amount of
Adjustment Amount that would appearin Balance Sheet
b Interest Payable 6,750 6,750
c Advertising Payable 60,000 60,000
d Accumulated Depreciation 20,000 30,000
f Unearned Plumbing Revenue 108,000 36,000
2-5
a Adjusting entries at December 31, 2007:
Trang 4a Trading Securities 13,000 Unrealized Gain on Trading Securities 13,000
Req bal in prepaid expenses:
144,000 x 4/12 48,000 Office supplies on hand 39,000 Store supplies on hand 23,000 Total 110,000 Reported amount 125,200 Req decrease in PE 15,200
Accumulated Depreciation 156,000
d No entry required The required balance in accrued interest is P22,500, computed as 200,000 x 15% x 9/12 This amount is already included in the Trade and Other Payables balance
Required balance in unearned rent 192,000 x 9/12 142,000 Reported balance 80,000 Required increase 62,000
2-6
a P1,200,000 Same as given total The transaction will increase office
supplies and decrease cash whose balances are both reflected
in total debit amount
Accumulated Depreciation (810,000+27,000)
837,000 RMP, Capital
Accumulated Depreciation 20,000
d P744,000 729,000 + 15,000 = 744,000; The use of P12,000 office
supplies does not affect the trial balance total
e P243,500 Total debits is P243,500 consisting of:
Cash – P48,000; Accounts Receivable – P27,500; Prepaid
Trang 5Insurance – P8,000; Equipment – P80,000; Salaries Expense – P42,000; Advertising Expense – P14,000; Property Tax Expense – P9,000; and Way Land, Drawing – P15,000
Total credits is P243,500 consisting of:
Accounts Payable – P44,000; Property Tax Payable – P5,600; Service Revenue – P66,900; and Way Land, Capital – P127,000
MULTIPLE CHOICE QUESTIONS
Theory
Problems
MC21 B
MC22 B 16,000 + 29,000 – 21,000 = 24,000
MC23 A
MC24 D 122,500 + 437,500 – 105,000 = 455,000
MC25 C 990,000 + 50,000 – 60,000 = 980,000
MC26 A 400,000 + (15% x 3.0M) = 850,000
MC27 C 36,000 x 34/36 = 34,000; 44,100 – 33,100 = 11,000
MC28 D 60,000 – 17,000 = 43,000
MC29 C 12,350 + 1,850 – 5,300 = 8,900
MC30 A (14,400 x 5/12) + 9,600 + (11,200 x 12/16) = 24,000
MC31 C 24,900 + 4,500 – 3,600 = 25,800
MC32 A P0 The post-closing trial balance includes real accounts only
MC33 A 36,000 x 4/12 = 12,000
MC34 C 30,000 + 45,000 + 20,000 = 95,000
MC35 B 144,000 – 95,000 = 49,000
MC36 A 1,337,100 + 274,000 – 120,000 + 67,000 = 1,558,100
or 1,684,000 – 274,000 + 120,000 + 80,100 – 52,000 = 1,558,100 MC37 B (7,200 X 21/24) + (3,600 X 2/6) + (24,000 X 27/36) = 25,500 – 28,200 =
2,700 Decrease
Trang 6MC38 A 45,000 x 10% x 30/360 = 375
MC39 B (27,000 x 3/12) + (22,200 x 6/12) + (28,800 x 9/12) + (10,700 x 12/12) =
60,150 – 56,250 = 3,900 Increase MC40 B 11,250 x 2/4 = 4,500