UMUC ACC220 quiz 1

UMUC – ACCT 220
QUIZ 1
You should open this
quiz, save the document with your filename, work through the problems, add your
answers to your saved document and then submit it via the LEO Assignments
location for Quiz 1.
The Quiz has 100 points, and counts for 15% of your
Final Grade.

PLEASE NOTE: YOU
MUST SUBMIT A WORD-PROCESSED QUIZ. I WILL NOT ACCEPT A HAND-WRITTEN, SCANNED IN
QUIZ!
The quiz is based
on Chapters 2 through 6 of Hermanson et al.

Directions: Please complete the following 7 parts. You
can use the answer sheets at the end of this document to complete this Quiz.

Part 1. Writing journal entries (Chapters 2 and 3). 2.5
points per JE – 25 points.
Please write a journal entry for the following 10
transactions, for Lillian’s Cooking School. All of the events listed below
occurred in October. On the answer sheet, be sure to number your journal
entries. Write the debit entry first and the credit entry second.

1.
Lillian
purchased $700 in cooking supplies for Cash
2.
Lillian’s
accountant paid $550 of the balance due in Accounts Payable
3.
Lillian
sent out bills to three new clients who signed up and took a cooking class. The
customers owe a total of $1,200 for classes they took last week.
4.
After
getting an unexpected check from her favorite aunt, Lillian invested $25,000 in
her business, buying Capital Stock in her corporation.
5.
A
new industrial-quality stove (Cooking Equipment) was purchased for the
business, for $3,200. Lillian signed a promissory note for the stove.
6.
Employees
were paid $2,800 for work done during October. Payday was October 14th.
7.
Maxwell
paid for his wife to attend cooking classes in November. On October 16th,he paid the Cooking School $1,000, for classes
that were scheduled to begin on November 7th.
8.
Lillian
pays for her liability insurance 6 months in advance. On October 20th,
she paid $3,000 for October through March of the following year.
9.
On
October 24th, the company received a check for $600 from a customer,
who paid the balance due on her account.
10. Lillian held a cooking
class on October 26th. Ten customers attended and paid $200 apiece
for the class ($2,000 total).
Part 2. Prepare 8 adjusting journal entries (Chapter 4)
2.5 points per JE – 20 points. Use the below answer sheets to prepare 8
adjusting journal entries for Milly’s Spa, for the month of August.

1.
Prepaid
rent includes monthly rent of $1,500 for each month for Milly’s Spa
Milly’s Spa used up $600 worth of spa supplies in
AugustDanisha paid $4,000 in June, to reserve spa
treatments for all of the bridesmaids in her wedding. In August, the Spa
provided the spa services to the bridesmaids.Milly’s Spa owed $11,500 in Wages to employees at
the end of August.The business accrued $925 in interest in August,
owed on a Note Payable. The interest will be paid when the note is repaid,
next year.Milly has many regular customers who come in for
spa treatments each month. Milly’s accountant sent out bills totaling
$39,200 for services rendered during the month of August.Spa equipment is depreciated at a rate of $950
per monthA local hotel contracts with Milly’s Spa to send
hotel guests to receive complimentary spa treatments as part of its
weekend packages. At month-end, Milly’s sent out a bill for $16,000 to the
hotel for services rendered to hotel guests.

Part 3. Prepare Closing Entries – Ch. 5 (10 points).
The Adjusted Trial Balance for Marilyn’s Auto Repair is shown below, for
January. Prepare the four closing entries for Marilyn’s Auto Repair. Use the JE
pages at the end of this quiz. HINT: The Income Summary has $49,825CR just
before it is closed.

Marilyn’s Auto Repair
January 31 Adjusted Trial Balance

Adjusted
Trial Balances

1/31/2013

Account Name

DR

CR

Cash

$24,300

A/R

$10,500

Repair Supplies

$800

Prepaid
Insurance

$5,000

Prepaid Rent

$7,500

Furniture

$11,925

Accumulated
Depreciation-Furniture

$2,700

Repair Equipment

$113,400

Accumulated
Depreciation-Repair Equipment

$22,800

Land Held for
Future Use (Investments)

$8,500

Accounts Payable

$16,500

Interest Payable

$300

Unearned Service
Revenues

$2,200

Salaries Payable

Notes Payable
(Due in three years)

$21,000

Capital Stock

$62,000

Retained
Earnings

$12,600

Dividends

$8,000

Service Revenues

$64,000

Rent Expense

$1,500

Insurance
Expense

$1,000

Interest Expense

$1,100

Salary Expense

$8,100

Repair Supplies
Expense

$475

Depreciation
Expense-Furniture

$800

Depreciation
Expense-Repair Equipment

$1,200

TOTALS

$204,100

$204,100

Please use the information below to complete parts 4,
5 and 6. Income Statement, Statement of Retained Earnings and a Classified
Balance Sheet – Ch. 5 (35 points). The following accounts for Fischer Tax
Accounting Services are shown below. The accounts are listed in Alphabetical
Order. Use the sheets at the end of the quiz to complete the Income
Statement (10 points), Statement of Retained Earnings (10 points) and the
Classified Balance Sheet (15 points). There are some check figures located on
the answer sheets. There are no intangible assets.

Fischer Tax Accounting Services –12/31/14 Adjusted
Trial Balance

DR

CR

Accumulated
Depreciation – Computers

$2,160

Accumulated
Depreciation – Furniture

$15,300

A/P

$14,200

A/R

$28,840

Capital
Stock

$20,000

Cash

$19,440

Computers

$13,200

Depreciation
Expense – Computers

$740

Depreciation
Expense – Furniture

$860

Dividends

$6,400

Furniture

$30,700

Insurance
Expense

$800

Interest
Expense

$880

Interest
Payable

$240

Investment
in Real Estate

$19,000

Land

$6,800

Notes
Payable (due in 2 years)

$32,240

Office
Supplies

$640

Office
Supplies Expense

$400

Prepaid
Insurance

$4,000

Prepaid
Rent

$10,000

Rent
Expense

$2,000

Retained
Earnings

$19,700

Salary
Expense

$16,500

Salaries
Payable

$4,000

Service
Revenue

$51,600

Unearned
Service Revenue

$1,760

TOTALS

$161,200

$161,200

Part 7. Matching Terms. Match each of the following 10 terms
to the correct definition or description (10 points)
1.
Matching principle
2.
Going concern
assumption
3.
Materiality
4.
Conservatism principle
5.
Cost principle
6.
Revenue recognition
principle
7.
Periodicity (time
period) principle
8.
Business entity
concept
9.
Stable Dollar
Assumption
10. Money
measurement

a)
Accounting and
business activities are recorded in months, quarters and fiscal years
b)
It is assumed that a
business will operate indefinitely
c)
Amounts earned from
selling goods and services should be recorded when the goods/services are
rendered, whether the customer has paid for them or not
d)
Sometimes the amounts
of events or transactions are too small to be recorded individually. They are
not significant
e)
Accounting
transactions should be recorded at the amount that was exchanged
f)
Accounting
transactions can be recorded using dollar values
g)
Effort should be made
to record accounting information to avoid overstating of revenues or asset
values. At the same time, understatement of liabilities or expenses should be
avoided
h)
Expenses should be
recorded during the same time period when the corresponding revenues were
earned
i)
A business is considered
to be separate from its owners (stockholders)
j)
The dollar is not
likely to fluctuate in value much over time

Use these pages for your answers

Part 1 (Journal Entries for Lillian’s Cooking School)
– No dates are needed for these October entries

JE #

Debit

Credit

1.

2.

3.

4.

5.

6.

7.

8.

Part 1 (Journal Entries)

JE #

Debit

Credit

9.

10.

PART 2 – August ADJUSTING ENTRIES FOR MILLY’S SPA

1.

2.

3.

4.

5.

6.

7.

8.

Part 3. Marilyn’s Auto Repair. Use this journal entry
page to complete Part 3- (Closing entries).
HINT: The Income Summary has $49,825CR just before it
is closed

Debit

Credit

1.

Close Revenue
Accounts

2.

Close Expense
Accounts

3.

Close the Income
Summary Account

4.

Close the Dividends
Account

Use this page to complete the Income Statement (Part 4)

Fischer’s Tax Services
Income Statement for the Year Ended December 31, 2014

Net
income

Part 5. Statement of Retained Earnings. Please complete a
Statement of Retained Earnings for Fischer Tax Accounting Services.
Fischer Tax Accounting Services
Statement of Retained Earnings
For the Year Ended December 31, 2014

Retained Earnings,
12/31/2014

$42,720

Part 6. Use this page to prepare a Classified Balance
Sheet. There are only 3 classes of assets (No Intangible Assets) – Check figures are in blue

Fischer Tax Accounting Services – Balance Sheet
December 31, 2014

ASSETS

Current Assets

Long-term Investments

Property, plant and equipment

Total
PP&E

$33,240

Total
Assets

$115,160

LIABILITIES AND OWNERS
EQUITY

Current Liabilities

Long-term Liabilities

Total
Liabilities

Stockholders’ Equity

Capital Stock

Retained Earnings

Total
Owners’ Equity

Total
Liabilities and Owners Equity

Part 7. Matching Terms. Match each of the following 10 terms
to the correct definition or description (10 points)
a)
Accounting and
business activities are recorded in months, quarters and fiscal years
b)
It is assumed that a
business will operate indefinitely
c)
Amounts earned from
selling goods and services should be recorded when the goods/services are
rendered, whether the customer has paid for them or not
d)
Sometimes the amounts
of events or transactions are too small to be recorded individually. They are
not significant
e)
Accounting
transactions should be recorded at the amount that was exchanged
f)
Accounting
transactions can be recorded using dollar values
g)
Effort should be made
to record accounting information to avoid overstating of revenues or asset
values. At the same time, understatement of liabilities or expenses should be
avoided
h)
Expenses should be
recorded during the same time period when the corresponding revenues were
earned
i)
A business is
considered to be separate from its owners (stockholders)
j)
The dollar is not
likely to fluctuate in value much over time

Letter for definition

Term

1.
Matching principle

2.
Going concern
assumption

3.
Materiality

4.
Conservatism
principle

5.
Cost principle

6.
Revenue recognition
principle

7.
Periodicity (time
period) principle

8.
Business entity
concept

9.
Stable Dollar
Assumption

10. Money
measurement