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Principles of Accounting, Volume 1: Financial Accounting

Exercise Set A

Principles of Accounting, Volume 1: Financial AccountingExercise Set A
EA 1.

LO 5.1Identify whether each of the following accounts is nominal/temporary or real/permanent.

  1. Accounts Receivable
  2. Fees Earned Revenue
  3. Utility Expense
  4. Prepaid Rent
EA 2.

LO 5.1For each of the following accounts, identify whether it is nominal/temporary or real/permanent, and whether it is reported on the Balance Sheet or the Income Statement.

  1. Interest Expense
  2. Buildings
  3. Interest Payable
  4. Unearned Rent Revenue
EA 3.

LO 5.1For each of the following accounts, identify whether it would be closed at year-end (yes or no) and on which financial statement the account would be reported (Balance Sheet, Income Statement, or Retained Earnings Statement).

  1. Accounts Payable
  2. Accounts Receivable
  3. Cash
  4. Dividends
  5. Fees Earned Revenue
  6. Insurance Expense
  7. Prepaid Insurance
  8. Supplies
EA 4.

LO 5.1The following accounts and normal balances existed at year-end. Make the four journal entries required to close the books:

Advertising Expense $5,600, Dividends 4,000, Rent Expense 6,000, Salaries Expense 48,000, Service Revenue 85,000, Utilities Expense 7,500.
EA 5.

LO 5.1The following accounts and normal balances existed at year-end. Make the four journal entries required to close the books:

Retained Earnings 22,000, Dividends 6,000, Fees Earned revenue 90,000, Selling Expenses 45,000, Administrative Expenses 16,000, Miscellaneous Expense 2,300.
EA 6.

LO 5.1Use the following excerpts from the year-end Adjusted Trial Balance to prepare the four journal entries required to close the books:

Adjusted Trial Balance. Dividends 24,000 debit. Sales revenue 194,000 credit. Automobile expense 15,500 debit. Insurance expense 30,000 debit. Salaries expense 96,000 debit. Supplies expense 6,500 debit.
EA 7.

LO 5.1Use the following T-accounts to prepare the four journal entries required to close the books:

T-Accounts. Cash debit balance 75,000. Service Revenue credit balance 220,000. Advertising expense debit balance 12,000. Rent Expense debit balance 18,000. Salaries Expense debit balance 120,000. Dividends debit balance 25,000. Retained Earnings credit balance 30,000.
EA 8.

LO 5.1Use the following T-accounts to prepare the four journal entries required to close the books:

T-Accounts. Cash debit balance 23,300. Revenue Earned credit balance 43,000. Commission expense debit balance 6,000. Supplies Expense debit balance 3,200. Wages Expense debit balance 28,000. Dividends debit balance 4,000. Retained Earnings credit balance 21,500.
EA 9.

LO 5.2Identify whether each of the following accounts would be listed in the company’s Post-Closing Trial Balance.

  1. Accounts Payable
  2. Advertising Expense
  3. Dividends
  4. Fees Earned Revenue
  5. Prepaid Advertising
  6. Supplies
  7. Supplies Expense
  8. Unearned Fee Revenue
EA 10.

LO 5.2Identify which of the following accounts would not be listed on the company’s Post-Closing Trial Balance.

Prepaid insurance $9,444, Land 34,000, Notes payable 48,000, Retained earnings 31,315, Insurance expense 12,689, Service revenue 82,500, Supplies 9,700, Salaries expense 51,500.
EA 11.

LO 5.3For each of the following accounts, identify in which section of the classified balance sheet it would be presented: current assets, property, intangibles, other assets, current liabilities, long-term liabilities, or stockholder’s equity.

  1. Accounts Payable
  2. Accounts Receivable
  3. Cash
  4. Equipment
  5. Land
  6. Notes Payable (due two years later)
  7. Prepaid Insurance
  8. Supplies
EA 12.

LO 5.3Using the following Balance Sheet summary information, calculate for the two years presented:

  1. working capital
  2. current ratio
12/31/18 and 12/31/19, respectively: Current assets 76,000, 295,000. Current liabilities 48,000, 163,500.
EA 13.

LO 5.3Using the following account balances, calculate for the two years presented:

  1. working capital
  2. current ratio
12/31/18 and 12/31/19, respectively: Accounts payable 2,000, 6,120. Accounts receivable 3,000, 8,450. Cash 4,500, 18,600. Prepaid advertising 1,200, 4,000. Utilities payable 950, 6,500. Wages payable 1,675, 8,600.
EA 14.

LO 5.3Using the following Balance Sheet summary information, calculate for the two companies presented:

  1. working capital
  2. current ratio

Then:

  1. evaluate which company’s liquidity position appears stronger, and why.
Company J and Company K, respectively: Current assets 158,500, 122,000. Current liabilities 141,000, 104,000.
EA 15.

LO 5.3Using the following account balances, calculate:

  1. working capital
  2. current ratio
Cash 27,000 debit. Accounts receivable 7,300 debit. Prepaid insurance 17,000 debit. Accounts payable 14,900 credit. Salaries payable 16,200 credit. Common stock 12,000 credit. Service revenue 66,000 credit. Administrative expenses 57,800 debit. Total debits and total credits 109,100.
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