Accounting Mechanics Quiz

Accounting Mechanics Quiz
Purpose of Quiz: This take home quiz has been designed as a review of the pre-requisite accounting knowledge necessary to be
successful in ACTG 381. This quiz focuses on recording basic accounting transactions/journal entries, understanding T-accounts, and
creating a set of financial statements. It is also intended as an opportunity to practice using basic Excel functions. The
accounting issues included in this quiz are assumed to have been covered in your prerequisite financial accounting course. If you
need a reference, you could refer to the textbook from your pre-requisite accounting course or Chapter 3 in the textbook for this
class. Students who are unable to successfully complete this quiz should consider taking ACTG 281 prior to ACTG 381.
Possible Points: 25 points; 20 for accounting accuracy and 5 for appropriate Excel technique (i.e., internal referencing among
spreadsheets, auto-sum, dr/cr control total, formatting).
Due Date: A printed copy of your completed Balance Sheet and Income Statement must be turned in at the beginning of class on
Thursday, January 11th. Your Excel file should be posted to D2L Assignments by 10pm on Friday, January 12th. Late assignments will
receive a score of zero as the solution will be posted on D2L the next day. If you are unfamiliar with D2L, please refer to
http://www.pdx.edu/oit/d2l
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Background: Summer Corporation (Summer) was founded in 2008 by Erica and Phil Summer. The company designs, sells, installs, and
services security systems for high-tech companies. The founders, who describe themselves as "entrepreneurial geeks," met in a
computer lab when they were teenagers and found they had common interests in working on security systems for critical industries.
Summer also has one employee, Suzanne Johnson, who has an MBA. To date Suzanne has been doing all the accounting for the company. In
June 2017, Summer hires you as an accounting intern.
Required:
Suzanne Johnson has just provided you with the attached preliminary unadjusted trial balance for 5/31/17. Assume this trial balance
has been correctly prepared. Summer's year end is June 30th.
(A) Using the Excel General Journal spreadsheet in this file, record the June transactions listed below AND the necessary month end
adjusting journal entries. Label the transactions in numeric sequence corresponding to the numbers below. Each of the transactions
below requires a journal entry. Note that there is a debit and credit control total at the top of the general journal so that you
can check after each entry to see if you are in balance.
1. $750,000 of product was sold on account. This product had a cost of goods sold of $360,000.
2. $62,000 received from customer for sales made on account in previous months.
3. The following invoices totaling $69,000 were received and recorded on account:
§ Legal and Accounting Expense of $27,000
§ Office Supplies Expense of $5,500
§ Utilities Expense of $17,200
§ Repair & Maintenance of $19,300
4. $116,000 of inventory was purchased on account and received into the warehouse during June. The company uses a perpetual
inventory system.
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5. $83,750 of vendor invoices were paid during June. These invoices had already been accrued into accounts payable in May.
6. On June 1 a customer made a $72,600 deposit for product sales to be made in July 2017.
7. Total June wages were $97,000, of which $84,750 were paid in June and $12,250 were to be paid in July. Payroll taxes should be
ignored when you record this entry.
8. On July 1, 2016, Summer sold equipment with an original cost of $12,000 and accumulated depreciation of $8,000 for $6,000. In
June 2017, Summer realized this entry had not yet been recorded. Hint: Since this equipment was sold on 7/1/16, make sure not to
include it in the calculation of year-end depreciation.
Suzanne also provided you the following information that she thought may be helpful in preparing the year-end financial statements.
9. On January 1, 2017, ABC Corp. had paid Summer $155,000 in advance for 8 months of consulting services starting on January 1,
2017. Suzanne has been properly recording consulting revenue each month.
10. Bad debt expense has been estimated at $23,500. Bad debt expense is recorded annually at the end of the year, and has not yet
been recorded.
11. Monthly interest expense on long-term liabilities is $6,845. Interest should be accrued every month but has not yet been accrued
for June.
12. The Prepaid Expense account includes a one-year insurance policy purchased and recorded on January 1, 2017 for $14,400. Suzanne
has been properly recognizing insurance expense each month through the end of May.
13. Depreciation is recorded annually on the straight line basis at the end of the fiscal year (i.e., no depreciation expense has
been recorded yet for 2017). The company owns one building which has a useful life of 30 years and is assumed to have a $250,000
salvage value. Furniture and equpment are assumed to have a useful life of 10 years with no salvage value. Hint: Don't forget the
impact of entry #8
14. On June 1, 2017, Summer declared a dividend of $132,000, to be paid on October 20, 2017. Do not use a separate Dividends
account. Debit the amount directly to Retained Earnings.
(B) "Post" the journal entries from the General Journal to the Excel spreadsheet of T-accounts in this file. All necessary T-
accounts have been provided. This should be completed through the use of Excel formulas rather than retyping the numbers in your T-
accounts. Please also place the number of each transaction next to each journal entry (see transaction ‘1’ in the Excel T-Account
sheet for an example). TIP: Set up your spreadsheet to have debit and credit control totals so that you can check after each entry
to see if you are in balance.
(C) In Excel, prepare a balance sheet as of 06/30/17 and a SINGLE-STEP income statement for the year ended 6/30/17. This should be
completed through the use of Excel formulas rather than retyping the ending balances from your T-accounts in the financial
statements. Note that you do not need to record closing entries to the General Journal, just use the T-account balances to create
your balance sheet and income statement. You do NOT need to prepare a Statement of Shareholders’ Equity or Statement of Cash Flows.
Income taxes should be ignored.
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Trial Balance 5-31-17
General Ledger Account Name Unadjusted T/B 5/31/17
Debit Credit
Cash 325,800
Accounts Receivable 211,543
Allowance for Doubtful Accounts 84,962
Inventory 1,641,300
Prepaid expenses 19,500
Building 700,000
Furniture & Equipment 125,000
Land 452,600
Accum Depreciation 205,564
Investments 185,200
Goodwill 630,000
Other Intangible Assets 115,600
Accounts Payable 1,056,340
Dividends Payable 0
Interest Payable 5,100
Unearned Revenue 158,660
Accrued Wages 41,630
Payroll Taxes Payable 8,850
Long Term Debt 650,000
Common Stock 920,000
Paid-in Capital 105,000
Treasury Stock 400,000
Retained Earnings 607,017
Sales Revenue 9,880,540
Cost of Goods Sold 6,145,876
Advertising Expense 185,000
Bad Debt Expense 0
Depreciation Expense 0
Insurance Expense 60,101
Interest Expense 53,214
Investment Income 13,230
Gain on sale of PPE 0
Legal and Accounting Expense 193,340
Office supplies Expense 187,613
Payroll Tax Expense 156,975
Property Tax Expense 104,570
Repair and Maintenance Expense 192,809
Utilities Expense 57,134
Wage Expense 1,593,718
Total 13,736,893 13,736,893 0.00
T-Accounts
Summer Corporation NAME:
Cash Accounts Receivable Allow for Doubtful Accts
beg 211,543
1 750,000
Inventory Prepaid Expenses Building
beg 1,641,300 360,000 1
Furniture & Equipment Accum Depreciation Land
Investments Goodwill Other Intangible Assets
Accounts Payable Dividends Payable Interest Payable
`
Unearned Revenue Accrued Wages Payroll Taxes Payable
Long Term Debt Common Stock Paid-in Capital
Treasury Stock Retained Earnings Sales Revenue
9,880,540 beg
750,000 1
Investment Income Gain on Equipment Cost of Goods Sold
beg 6,145,876
1 360,000
Advertising Expense Bad Debt Expense Depreciation Expense
Insurance Expense Interest Expense Legal & Actg Expense
Office Supplies Expense Payroll Tax Expense Property Tax Expense
Repair & Maintenance Exp Utilities Expense Wage Expense
GenJournal
Summer Corporation
General Journal
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1,110,000 1,110,000 (Control totals)
# Transaction Debit Credit
1 Accounts Receivable 750,000
Revenue 750,000
Cost of Goods Sold 360,000
Inventory 360,000
To record sale of product
Income Stmt
Student Name:
Section:
Summer Corporation
Income Statement
For the year ended 6/30/17
Revenues
Sales Revenue 0.00
Total Revenues
Expenses
Total Expenses
Net Income
Balance Sheet
Student Name:
Section:
Summer Corporation
Balance Sheet
6/30/2017
Current assets
Cash 0.00
Total Current Assets
Total Assets
Liabilities and Stockholders' Equity
Current Liabilities
Total Current Liabilities
Total Liabilities
Stockholders' Equity
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
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