ACCT 311 Midterm Practice Student name_____________________

Section OP55
MacEwan University
Instructor: Natalia Khinkanina, Ph.D., CPA
Winter 2020 Student ID_______________________

Total time: 90 minutes

Instructions to students
1. During the exam you are not permitted to use: electronic organizers, cell phones, head
phones, text messaging. Please turn off your cellphones!

2. No extra time will be provided. When the end of the exam is announced, all students
must stop writing and hand in their paper immediately to avoid penalty. The exam will
not be returned to you.

3. All pages of the exam must be returned.

4. Scrap paper is provided at the end of the exam paper. Do not detach!

5. The exam consists of …questions on 10 pages (including the cover sheet) for a total
of …. marks.

6. Where appropriate clearly show any calculations and explanations. Be sure to state
any assumptions you find necessary.
Question 1

Select the best answer for each of the following items. If more than one answer is
given for an item, that item will not be marked. Incorrect answer will be marked
as zero. Marks will not be awarded for explanation.

1) By definition, which type of organization has shareholders?

A) Partnerships
B) Sole proprietorships
C) Corporations
D) Limited liability companies
E) Private enterprise
Answer: C

2) A Canadian publicly traded enterprise uses which reporting standard?

A) Accounting Standards for Private Enterprises

B) International Financial Reporting Standards
C) Accounting Standards for Not-for-Profit Organizations
D) Accounting Standards for Pension Plans
E) Accounting Standards for Canadian Accounting
Answer: B

3) Which of the following is considered an asset?

A) Accounts payable
B) Sales
C) Accounts receivable
D) Common shares
E) Notes payable
Answer: C

4) Which of the following is a FALSE statement?

A) Revenues provide inward flows of assets.

B) Revenue is categorized as an asset.
C) Revenue is categorized as part of retained earnings.
D) Revenues are generated from the sale of goods and services.
E) Revenue is an increase in retained earnings.
Answer: B
5) Which of the following is a revenue account?

A) Professional fees earned

B) Accounts payable
C) Accounts receivable
D) Wages
E) Cash
Answer: A

6) A T-account has a $509 credit balance. This account is most likely:

A) common shares.
B) land.
C) advertising expense.
D) prepaid insurance.
E) cash.
Answer: A

7) A T-account has a $299 debit balance. This account is most likely:

A) accounts receivable.
B) bicycle repairs revenue.
C) wages payable.
D) common shares.
E) service fees.
Answer: A

8) Credit means:

A) decrease.
B) increase.
C) the right side of an account.
D) the left side of an account.
E) the total of the T-account.
Answer: C

9) A promissory note with a term of one year and a rate of 5% is considered a(n):

A) Notes Receivable
B) Accounts Receivable
C) Dividends
D) Prepaid Expenses
E) Revenue
Answer: A
10) A deposit received for custom-made furniture is considered a(n):

A) Accounts Receivable
B) Notes Receivable
C) Unearned Revenue
D) Accounts Payable
E) Revenue
Answer: C

Question 2

Given the following accounts, calculate the income or loss for ABC Company.

Retained earnings $65,000

Assets $10,000
Revenue $29,500
Expenses $33,000
Dividends paid $3,500

Answer: ABC Company has a loss of $3,500.

Calculation: Revenue $29,500 - Expenses $33,000 = Loss of $3,500

Question 3
Review the transactions below and determine whether you would use a debit or a credit to record the
following changes. Indicate your decision by entering "Debit" or "Credit" in the right-hand column.

1. An increase in Wage Expense

2. A decrease in Notes Payable
3. An increase in Prepaid Insurance
4. An increase in Common Shares
5. A decrease in Office Supplies
6. An increase in Dividends
7. An increase in Revenue
8. A decrease in Notes Receivable
9. An increase in Advertising Expense
10. A decrease in Cash

Answer:
1. An increase in Wage Expense Debit
2. A decrease in Notes Payable Debit
3. An increase in Prepaid Insurance Debit
4. An increase in Common Shares Credit
5. A decrease in Office Supplies Credit
6. An increase in Dividends Debit
7. An increase in Revenue Credit
8. A decrease in Notes Receivable Credit
9. An increase in Advertising Expense Debit
10. A decrease in Cash Credit
Question 4

Mandy's Web Design Company has the following account balances on December 31, 2015.

Salary Expense $500

Cash $400
Supplies Expense $300
Insurance Expense $100
Accounts Payable $200
Other Expenses $100
Consulting Revenue $6,000

Prepare the Income Statement for Mandy's Web Design Company for the month of December.
Answer: Mandy's Web Design Company
Income Statement
Month Ended December 31, 2015
Consulting Revenue $6,000
Expenses
Salary Expense $500
Supplies Expense 300
Insurance Expense 100
Other Expenses 100
Total Expenses 1,000
Net Income $5,000

Question 5

Given the following information, prepare the statement of financial position for Meranda's Accounting
Service for December 31, 2015.

Common Shares $35,600

Cash $58,700
Ending Retained Earnings $52,050
Office Furniture $14,650
Accounts Receivable $15,950
Building $91,250
Mortgage Payable $77,700
Office Equipment $16,300
Accounts Payable $31,500
Answer: Meranda's Accounting Service
Statement of Financial Position
As of December 31, 2015
Assets Liabilities
Cash $58,700 Accounts Payable $31,500
Accounts
Receivable 15,950 Mortgage Payable 77,700
Office
Equipment 16,300 Total Liabilities 109,200
Office
Furniture 14,650
Shareholders'
Building 91,250 Equity
Total Assets $196,850 Common Shares 35,600
Retained Earnings 52,050
Total Shareholders'
Equity 87,650
Total Liabilities and
Equity $196,850

Question 6
Journalize the following transactions. You may leave out the explanations and disregard the posting
reference.

A. Paul invested $33,000 into his company, Paul's Sports, on January 9.

B. The company purchased $6,300 of furniture for cash on February 14.
C. The company paid three month's rent of $4,500 and recorded it as a prepaid expense on February 22.
D. The company bought $5,300 of office desks and $9,000 of computer equipment for $14,300 cash on
March 9.
E. The company incurred $1,400 of wages to be paid next week. This entry is to be dated March 19.
Answer:
ACCOUNT/
DATE DESCRIPTION PR DEBIT CREDIT
1/9 Cash 33,000
Common Shares 33,000

2/14 Furniture 6,300

Cash 6,300

2/22 Prepaid Rent 4,500

Cash 4,500

3/9 Office Desks 5,300

Computer
Equipment 9,000
Cash 14,300

3/19 Wages Expense 1,400

Wages Payable 1,400
Question 7
Journalize the following adjusting journal entries for December 31. Explanations are not required.

a. Beginning supplies were $2,096. Ending supplies were $923.

b. Wages incurred but not yet paid are $1,135.
Answer:
POST
DATE ACCOUNTS REF. DR CR
Dec. 31 Supplies Expense 1,173
Supplies 1,173

Dec. 31 Wages Expense 1,135

Wages Payable 1,135

Question 8
Journalize the following entries for March 31. Explanations are not required.

b. Unearned revenue was earned at the rate of $300 per month, starting November 1.
c. Wages incurred but not paid are $2,300.
Answer:
POST
DATE ACCOUNTS REF. DR CR

Mar. 31 Unearned Revenue 600

Revenue 600

Mar. 31 Wages Expense 2,300

Wages Payable 2,300
Question 9

The following information was available to reconcile ABC Company’s book balance of Cash with
its bank statement as of October 31, 2018:

a) The company’s Cash account had a $52,796 debit balance, but its bank statement
showed a $56,040 balance

b) A comparison of the cheques written with the cheques that have cleared the bank shows
the outstanding cheque for $7728

c) In comparing the cancelled cheques returned by the bank with the company’s entries, it
was found that cheque for October rent was correctly written for $2,500 but was
erroneously entered in the company’s records as $2,050

d) The bank had collected a $17,910 non-interest-bearing note for ABC Company. This
transaction was not recorded by ABC Company

e) The bank statement listed a $1,590 NSF cheque plus a $20 NSF charge (totalling $1,610)

f) The bank statement shows a $30 bank service charge. It had not been recorded by the
company

g) The October 31 cash receipts (deposits), totalling $20,304, did not appear on the bank
statement

Required

1. Prepare bank reconciliation for the company as of October 31, 2018

2. Prepare the journal entries to bring the company’s book balance of cash into agreement
with the reconciled balance
 ABC Company
Bank Reconciliation
At October 31, 2018
$ $
Bank's balance, Oct 31 56,040 Company's balance, Oct 31 52,796

Deposits in transit (+) 20,304 Collection of N/R (+) 17,910

Outstanding cheques (-) 7728 NSF (-) 1,610

Bank Charges (-) 30

Error (2,500-2,050) 450

Reconciled Balance, Oct 31 68,616 Reconciled Balance, Oct 31 68,616

Which was to be proved

AJE, Oct 31 Dr Cash 17,910

Cr N/R 17,910
to record collection of N/R

Dr A/R 1,610
Cr Cash 1,610
to record NSF cheque

Dr Bank Charge 30
Cr Cash 30
to record pmt of bank charges

Dr Rent Expense 450

Cr Cash 450
to correct an error
 Question 10

A company made the following merchandise purchases during September 2018:

September 1 Purchased 200 units at $100 each

September 15 Purchased 300 units at $105 each

The following sales of goods occurred during September 2012:

estion 2_Solution for perpetual system and periodic inventory systems
# $/unit total,$
September 10 Sold 250 units at $150 each
100 95 9500
September 20 Sold 200 units at $160 each
rchased 01-Sep 200 100 20000
The beginning inventory was 100 unitsWA at cost
$951each.
= 98.33333 uses a perpetual
The company
d 10-Sep 250 COGS 1 =
inventory system; therefore updates inventory through the 24583.33
period.

rchased Required
15-Sep 300 105 31500
WA cost 2 = 104.0476
d 20-Sep 200 COGS 2 = 20809.52
1. What would be the COGS and EI if the company would use the weighted average
Requirement: GAS,$cost? Assume
61000 that the physical count revealed that 150 units were on hand at the
end of the period
equirement EI,# 150
Provide your calculations with the two digits after the decimal
equirement COGS,$ 45392.86
EI,$ 15607.14

equirement GAS,$ 61000 therefore, WA = 101.6667

COGS,$ 45750
EI,$ 15250