FATİH UNIVERSITY

FACULTY OF ECONOMIC AND ADMINISTRATIVE SCIENCES

MAN 201 PRINCIPLES OF ACCOUNTING I

FINAL EXAM

Instructor: ALI COSKUN

Duration: 80 Minutes January 14, 2004

QUESTIONS

Question 1. Smart Furniture Corporation is a merchandising company that sells chairs. The company uses a perpetual inventory system. It records sales at the gross invoice price and purchases at net cost. Smart Furniture adjusts and closes its accounts monthly. The followings are the transactions in March 2003:

Mar 1 Smart Furniture Corporation purchased 50 executive chairs from Comfort Company on account. Total cost of these chairs was $3,300, terms 3/10,n/30.

Mar 3 Sold 20 executive chairs on account to Sweet Home Corporation for $90 each, terms 2/10, n/30.

Mar 8 Sweet Home Corporation returned three executive chairs purchased on March 3. The amount reduced from the account receivable of Sweet Home Corporation.

Mar 10 Purchased 80 simple chairs from Comfort Company on account. Total cost of these chairs was $2,000, terms 2/10,n/30.

Mar 11 Returned 10 simple chairs to Comfort Company because they were in the wrong color.

Mar 12 Collected accounts receivable from the sales on March 3 within the discount period.

Mar 15 Sold 10 executive and 25 simple chairs for cash, total sales price was $2,000. Smart Furniture paid $150 for delivering these chairs.

Mar 30 Paid the accounts payable for the purchases on March 1.

Required:

a. Prepare the journal entries to record these transactions.

b. Prepare the subsidiary inventory ledger for simple and executive chairs for the month.

Question 2. Juliano Company is a merchandising company that uses a periodic inventory system.

Prepare an income statement for the year ended December 31, 2003 using the followings accounts balances of the company at December 31, 2003.

Cost of goods sold ? Depreciation expense 32,750

Inventory, Jan.1, 2003 (Beginning) 120,000 Inventory, Dec. 31, 2003 (Ending) 135,000

Insurance expense 55,000 Rent expense 213,000

Purchase discount lost 7,000 Purchases 1,575,000

Sales 2,719,300 Sales discounts 97,800

Sales returns and allawances 35,500 Salaries expense 712,500

Question 3. Strong Wind Company operates a ferry that takes travelers across the wild river. The company adjusts its accounts at the end of each month. Selected account balances appearing on the May 31, 2003 unadjusted trial balance are as follows:

DEBIT CREDIT

Prepaid Rent........................................................................................................... $12,000

Unexpired Insurance................................................................................................. 2,400

Ferry ........................................................................................................................ 115,200

Accumulated Depreciation: Ferry................................................................................... $22,800

Other Data

1. The ferry is being depreciated over a 8-year estimated useful life, with no residual value.
2. Five months’ rent had been prepaid on May 1.
3. The unexpired insurance is a 12-month fire insurance policy purchased on March 1.

Required:

1. Prepare the adjusting entries required on May 31, 2003.
2. Determine the age of the ferry in months.
3. How much is the monthly rent expense.
4. How much is the original cost of the 12-month fire insurance policy.