UMUC – ACCT 220
EXAM 1 – Part 2 (LEO)
This is Part 2 of Exam 1. Part 1 is a multiple choice exam is located on WileyPlus. Part 1 is a timed exam.
You should treat Part 2 (this part) like a Take home Exam. You can open it, 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 Exam 1 Part 2.
Part 2 of the Exam is worth 35 points. Each part is based on Chapters 2 and 3.
Directions: Please complete the following 4 parts. You can use the answer sheets at the end of this document to complete this Exam. Part 1 is for Lillian’s Cooking School. Part 2 is for Milly’s Spa. Parts 3 and 4 are for Lemond’s Plumbing.
Part 1. Writing journal entries (Chapter 2). 2 points per JE – 12 points.
Please write a journal entry for the following 8 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 for cooking class. The customers owe $1,200 for classes they took last week.
4. After getting an unexpected check from her favorite aunt, Lillian invested $5,000 in her business.
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.
Part 2. Prepare 6 adjusting journal entries (Chapter 3) 2 points per JE 8 points. Use the below answer sheets to prepare 6 adjusting journal entries for Milly’s Spa, for the month of August.
9. 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 August
- Danisha 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.
Use the Adjusted Trial Balance below to complete parts 3 and 4.
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Lemond’s Plumbing Services January 31, 2014 Adjusted Trial Balance |
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Adjusted Trial Balances |
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1/31/2014 |
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Account Name |
DR |
CR |
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Cash |
$14,300 |
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A/R |
$1,500 |
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Plumbing Supplies |
$2,000 |
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Unexpired Insurance (Prepaid) |
$5,000 |
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Prepaid Rent |
$7,500 |
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Vehicles |
$56,575 |
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Accumulated Depreciation Vehicles |
$11,700 |
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Plumbing Equipment |
$13,400 |
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Accumulated Depreciation Plumbing Equipment |
$2,700 |
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Land |
$18,500 |
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Accounts Payable |
$6,500 |
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Interest Payable |
$3,000 |
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Unearned Plumbing Revenues |
$4,200 |
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Notes Payable (Due in two years) |
$21,000 |
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C. Lemond, Capital |
$54,425 |
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C. Lemond, Drawing |
$4,000 |
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Plumbing Revenues |
$48,775 |
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Rent Expense |
$1,500 |
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Insurance Expense |
$1,000 |
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Interest Expense |
$1,100 |
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Wages Expense |
$24,100 |
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Plumbing Supplies Expense |
$75 |
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Depreciation Expense Vehicles |
$850 |
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Depreciation Expense Plumbing Equipment |
$900 |
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TOTALS |
$152,300 |
$152,300 |
Part 3. Income Statement – Ch. 3 (6 points). Using the Adjusted Trial Balance for Lemond’s Plumbing Services, prepare an Income Statement. Use the page set up for you at the end of this exam. Use the format shown for the Income Statement on Illustration 3 26.
Part 4. Balance Sheet – Ch. 3 (9 points). After completing the Owner’s Equity Statement, the Capital account, C. Lemond, Capital, has a balance of $69,675. Use the last page of this document to prepare a Balance Sheet. Use the format shown on Illustration 3 27 of your textbook.
Use these 2 pages for your answers
Parts 1 and 2 (Journal Entries)
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JE # |
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Debit |
Credit |
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Use this journal entry page to complete parts 1 and 2.
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JE # |
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Debit |
Credit |
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Use this page to complete the Income Statement (Part 3)
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Lemond’s Plumbing Services Income Statement for the Month Ended January 31, 2014 |
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Net income |
$19,250 |
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Part 4. Use this page to prepare a Balance Sheet.
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Lemond’s Plumbing Services Balance Sheet January 31, 2014 |
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Assets |
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Liabilities and Owner’s Equity |
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