ACCT 225 – Exam 1 Review Problems:IMPORTANT: These review problems DO NOT cover every topic that is on the first exam.Please do not study solely from these problems. If your goal is to past the first exam, be sure that you have read and studied the assigned pages in the textbook, watched video lectures 1-5at least once, worked all the homework assignments, and understand the in-class exercises covered in the recitation sessions. Please remember that the inclass exercises do not cover all of the materials that you are responsible for. Any material covered in the first five video lectures may be tested on the first exam. The exam will consist of seventeen (17) multiple-choice questions and three (3) problems. The problems will be graded for accuracy and proper format.The following review sessions have been scheduled:Friday, February 8 7:00 – 8:45PM Belk Auditorium (Room 005)Monday, February 11 8:30 – 9:45PM Room 002 You should work through the following review problems before coming to a review session.1. Given the list of accounts below, prepare a classified balance sheet, the retained earnings column of the statement of stockholders’ equity, and a multiple-step income statement in proper format for JHF Corporation for the year ended 12/31/12. (Depreciation is ignored on the first exam.)Accounts Receivable $120,000Notes Payable (due 6/13) $ 78,000Cash $190,480Sales Revenue $450,000Rent Expense $ 70,000Accounts Payable $105,000Salaries Expense $119,000Common Stock (100,000 shares outstanding) $400,000Supplies $ 15,000Interest Expense $ 11,000Inventory $ 68,000Land $125,000Mortgage Payable (due 2020) $168,000Equipment $240,000Notes Receivable (due 2/13) $ 40,000Retained Earnings (as of 1/1/12) $260,000Cost of Goods Sold $165,000Gain on Sale of Equipment $ 4,000Supplies Expense $ 12,000Dividends $ 48,000Income Tax Expense $ 23,520Buildings $225,000Interest Income $ 7,0002. Based on the following information for Smith & Company for the month of August,(1) determine the impact of each transaction on the accounting equation, and (2) prepare the journal entry to record each transaction. Be sure to use proper format (you may omit dates and explanations).a. The company issues common stock for $10,000 cash.b. $1,000 of supplies was purchased on account.c. A $150 utility bill was received and paid immediately.d. A $300 invoice for advertising was received at the beginning of the month. Smithplans to pay the invoice by the end of the month.e. A partial payment of $600 is paid to the supplier for supplies purchased in (b) above.f. Office equipment totaling $8,000 was purchased by paying $2,500 cash and signinga note for the balance.g. The company provides $3,000 of services to a client on account.h. An additional $800 of supplies is purchased with cash.i. The advertising invoice in (d) above is paid.j. Smith collects from the client in (g) above.3. This question is a continuation of Question 2 above:a. If Smith and Company began the month with $8,000 of cash, what is the ending balance in the Cash account? Prepare a T-Account to show how you arrived at your answer. b. If the company began the month with $900 of supplies, what is the ending balancein the Supplies account? Prepare a T-Account to show how you arrived at your answer. c. If Smith began the month with a zero balance in accounts payable, what is the ending balance in Accounts Payable? Prepare a T-Account to show how you arrived at your answer.d. Assume that August was Smith’s first month of operations, so all accounts had a zero beginning balance. After all of the transactions in Question 2 have been recorded, what is the amount of Total Assets, total liabilities, and total stockholder’s equity? Don’t draw T-Accounts for each account – that would take too long. Use the accounting equation.4. Based on the following information for JHF Corporation, prepare the necessary adjusting entries as of December 31 (year-end) in proper format (you may omit explanations).a. JHF began the year with $5,000 of supplies, purchased additional supplies of $6,000 during the year, and had $4,000 remaining at year-end. b. JHF paid $3,600 for 3 months of rent on November 1of the current year. The rent period began immediately.c. On October 1, JHF received $4,800 from a client for consulting services that the company will provide over the next 6 months. As of December 31, JHF had provided one-third of the services.d. JHF’s weekly (Monday-Friday) payroll totals $12,000. The employees are paid every Friday, which includes Friday’s work. December 31 falls on a Monday this year.e. On April 1 of the current year, JHF borrowed $30,000 from the Bank for two years at 8% interest. Interest is due annually on March 31; principal is due at maturity. 5. The following is a list of account balances, after year-end adjustments, for GC Services, Inc. as of December 31, 2012:Cash $ 184,500Sales Revenue $ 910,000Rent Expense $ 31,000Salaries Expense $ 619,200Retained Earnings $ 32,000 Accounts Receivable $ 90,000Unearned Revenue $ 4,800Dividends $ 12,500Accounts Payable $ 2,000Supplies $ 11,000Prepaid Rent $ 3,600Utility Expense $ 52,000Notes Payable $ 30,000Common Stock $ 25,000a. Prepare the closing entries to (1) close net income and (2) close dividends.b. Prepare a post-closing trial balance.Be sure that you understand and can apply all of the accounting concepts, assumptions, and principles discussed in Lecture 5. Again, the inclass exercises and these review problems do not cover all of the topics tested on the first exam. The material covered in the video lectures is critically important to your success on this
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