BANKING ACADEMY vsdsvdsdsvds

MINISTRY OF EDUCATION AND TRAINING

INTRODUCTORY TO ACCOUNTING 1

BANKING ACADEMY

MID-TERM TEST 2
Mode of study: Full time
Allowed time: 60 minutes

Question 1 (30 marks): The adjusted trial balance of Full Moon Corporation appears below.
Using the information from the adjusted trial balance, you are to prepare for the month ending
December 31:
1.
2.
3.

an income statement.
a retained earnings statement.
a balance sheet.
FULL MOON CORPORATION
Adjusted Trial Balance
December 31, 2021

Cash ...................................................................................................
Accounts Receivable..........................................................................
Supplies..............................................................................................
Equipment ..........................................................................................
Accumulated Depreciation—Equipment...........................................
Accounts Payable...............................................................................
Unearned Service Revenue................................................................

Common Stock...................................................................................
Retained Earnings..............................................................................
Dividends...........................................................................................
Service Revenue.................................................................................
Supplies Expense...............................................................................
Depreciation Expense........................................................................
Rent Expense.....................................................................................

Debit
$ 2,900
2,200
1,800
16,000

$ 4,000
3,300
5,000
10,000
4,400
2,000
4,200
600
2,500
2,900
$30,900

Question 2 (10 marks) : Entries for bad debt expense.
A trial balance before adjustment included the following:
Debit
$120,000

Accounts receivable
Allowance for doubtful accounts
Sales
Sales returns and allowances

Credit
1,000
$430,000

4,000

Give journal entries assuming that the estimate of uncollectible is determined by taking
(1) 5% of gross accounts receivable and
1

Credit

______
$30,900


(2) 1% of net sales.
Problem 3 (20 marks) : Matlock Corporation sells item A as part of its product line. Information
as to balances on hand, purchases, and sales of item A are given in the following table for the
first six months of 2021.
Quantities
Unit Price
Date
Purchased

Sold
Balance
of Purchase
January 1
—
400
$3.60
February 14

1,500

—

1,900

$3.90

March 7

—

200

1,700

—

April 9

—

670

1030

—

June 8
600
—
1,630
$4.25
Instructions
(a) Compute the ending inventory at June 30 under the perpetual LIFO inventory pricing
method.
(b) Compute the cost of goods sold for the first six months under the periodic FIFO inventory
pricing method.
Problem 4 (40 marks) : At December 31, 2020, Sun Corporation reported the following plant
assets.
Land
$ 9,000,000
Buildings
$26,500,000
Less: Accumulated depreciation—buildings
11,900,000
14,600,000
Equipment
40,000,000
Less: Accumulated depreciation—equipment
4,000,000

36,000,000
During 2021, the following selected cash transactions occurred.
February 1: Purchased land for $3,200,000.
March 1: Sold equipment that cost $600,000 when purchased on January 1, 2012. The
equipment was sold for $190,000.
April 1: Sold land for $1,600,000. The land cost $2,000,000.
August 1: Purchased equipment for $1,500,000
Dec. 31: Retired equipment that cost $1,200,000 when purchased on December 31, 2010. No
salvage value was received.
Instructions
(a) Journalize the transactions. Sun Corporation uses straight-line depreciation for buildings and
equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the
equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation
on assets disposed of at the time of sale or retirement.
(b) Record adjusting entries for depreciation for 2021.
(c) Prepare the plant assets section of Sun Corporation’s balance sheet at December 31,
Note: Closed book
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