Accounting 3342 Group Test Paper
Accounting 3342 Group Test #1 Sept. 10, 2014
Problem 1
Below are selected transactions of Blackbird Ltd. for 2014:
1. On May 10, the company purchased goods from Jay Corp. for $60,000, terms 2/10, n/30. Purchases and accounts payable are recorded at gross amounts. The invoice was paid on May 18. (Use the gross method.)
2. Assume the same information as in (1) above, except that the company uses the ‘net method’, and payment was made on May 25.
3. On June 1, the company purchased equipment for $180,000 from Seagull Ltd., paying $60,000 in cash and giving a one-year, 8% note for the balance.
Required:
a. Prepare the journal entries necessary to record the transactions above using appropriate dates. (Record two entries for (1) and (2), one for the purchase, and one for the payment.)
b. Prepare the adjusting entries necessary at December 31, 2014 in order to …show more content…
May 10, 2014 Purchases/Inventory ($60,000 x 100%) 60,000 Accounts Payable 60,000
May 18, 2014 Accounts Payable 60,000 Cash 58,800 Purchase discounts taken……………………………………….. 1,200
b. May 10, 2014 Purchases/Inventory ($60,000 x 100%) 58,800 Accounts Payable 58,800
May 25, 2014 Accounts Payable 58,800 Cash 60,000 Purchase discounts forfeited……………………………………….. 1,200
c. Interest Expense 5,600 Interest Payable ($120,000 × 8% × 7 ÷ 12) 5,600
Problem 2 Solution
Xtreme
Cash 1,000,000
Discount on Notes Payable 319,420* Notes Payable 1,000,000 Unearned Revenue (Rent) 319,420
Abu Dhabi
Notes Receivable 1,000,000
Prepaid Rent 319,420 Cash 1,000,000 Discount on Notes Receivable 319,420
*Future Value of $1,000,000 less $680,580 (Present Value at 8% for 5
Problem 1
Below are selected transactions of Blackbird Ltd. for 2014:
1. On May 10, the company purchased goods from Jay Corp. for $60,000, terms 2/10, n/30. Purchases and accounts payable are recorded at gross amounts. The invoice was paid on May 18. (Use the gross method.)
2. Assume the same information as in (1) above, except that the company uses the ‘net method’, and payment was made on May 25.
3. On June 1, the company purchased equipment for $180,000 from Seagull Ltd., paying $60,000 in cash and giving a one-year, 8% note for the balance.
Required:
a. Prepare the journal entries necessary to record the transactions above using appropriate dates. (Record two entries for (1) and (2), one for the purchase, and one for the payment.)
b. Prepare the adjusting entries necessary at December 31, 2014 in order to …show more content…
May 10, 2014 Purchases/Inventory ($60,000 x 100%) 60,000 Accounts Payable 60,000
May 18, 2014 Accounts Payable 60,000 Cash 58,800 Purchase discounts taken……………………………………….. 1,200
b. May 10, 2014 Purchases/Inventory ($60,000 x 100%) 58,800 Accounts Payable 58,800
May 25, 2014 Accounts Payable 58,800 Cash 60,000 Purchase discounts forfeited……………………………………….. 1,200
c. Interest Expense 5,600 Interest Payable ($120,000 × 8% × 7 ÷ 12) 5,600
Problem 2 Solution
Xtreme
Cash 1,000,000
Discount on Notes Payable 319,420* Notes Payable 1,000,000 Unearned Revenue (Rent) 319,420
Abu Dhabi
Notes Receivable 1,000,000
Prepaid Rent 319,420 Cash 1,000,000 Discount on Notes Receivable 319,420
*Future Value of $1,000,000 less $680,580 (Present Value at 8% for 5