ACCT 211

INTRODUCTORY ACCOUNTING I
Mock Final Exam 2016
Student Name:………………………….

Student ID Number (if any):………….

Instructions:

1. Please insert your name and student number (if any) in the space provided above so
that each exam paper can be clearly associated with a specific student. Exams without
a name or student number may lead to a student not receiving a mark.
2. The final-semester examination contains six problems.
3. Read each problem carefully before providing your designated answer.
4. You have one hundred twenty minutes (120 minutes) to complete the final-semester
examination. There is NO reading time for the final-semester examination.
5. The final-semester examination is worth fifty (50%) percent of your overall grade.
6. This is a CLOSED BOOK examination. You need only have you pens and exam
paper on the desk in front of you. All other material should be in your bags at front of
room or below the desk.
7. You may only begin the exam when formally instructed by the invigilator and must
finish immediately when instructed.

End of Instructions

Page  1  of  4  
 
 Beginning of Exam Questions

Problem I - Adjusting Entries (15 points)

The following information for TL&MA Company is available on June 30, 2016, the end of a
monthly accounting period. You are to prepare the necessary adjusting journal entries for TL&MA
Company for the month of January for each situation given. Appropriate adjusting entries had been
recorded in previous months. You may omit journal entry explanations.

1. Lance Company purchased a 3-year insurance policy on March 1, 2016, and debited Prepaid
Insurance for $7,200.

2. On January 1, 2016, a tenant in an apartment building owned by TL&MA Company paid

$5,400, which represents six months' rent in advance. The amount received was credited to
the Unearned Rent account.

3. On June 1, 2016, the balance in the Office Supplies account was $100. During June, office
supplies costing $600 were purchased. A physical count of office supplies at June 30
revealed that there was $250 still on hand.

4. On March 31, 2016, TL&MA Company purchased a delivery van for $42,000. It is
estimated that the annual depreciation will be $8,400.

5. TL&MA Company has two office employees who earn $80 and $90 per day, respectively.
They are paid each Friday for a five-day workweek that begins each Monday. June 30 is a
Thursday in 2016.

Problem II - Journal Entries (15 points)

For each situation given below prepare journal entries on the October for MA Company. MA uses a
perpetual inventory system.

Oct. 5 Paid $15,000 cash for operating expenses that were incurred and properly recorded
in the previous period.

8 Purchased merchandise for $12,000 on account. Credit terms: 2/10, n/30.

10 Paid freight bill of $200 for merchandise purchased on October 8.

15 Paid for merchandise purchased on October 8. The company takes all discounts to
which it is entitled.

20 Sold merchandise for $16,000 to TL on account. The cost of the merchandise sold
was $9,500. Credit terms: 2/10, n/30.

25 Issued a credit memo to TL for $1,000 for merchandise returned by him from the
sale on October 20. The cost of the merchandise returned was $600.

Page  2  of  4  
 
Problem III - Multiple-Step Income Statement (15 points)

Below is a partial listing of the adjusted account balances of TL Department Store at year-end on
December 31, 2016.
Accounts Receivable $ 20,000
Cost of Goods Sold 260,000
Selling Expenses (includes depreciation) 36,000
Interest Expense 2,500
Accumulated Depreciation - Building 12,000
Sales Discounts 20,000
Merchandise Inventory 47,000
Administrative Expenses (includes depreciation) 17,000
Sales 400,000
Accounts Payable 15,000
Interest Revenue 900
Instructions
Using whatever data you believe appropriate, prepare a multiple-step income statement for TL
Department Store for the year ended December 31, 2016.

Problem IV - Periodic Inventories (10 points)

NTMA Company uses the periodic inventory method and had the following inventory information
available for the month of November.
Date Transaction Units Unit Cost
11/1 Beginning inventory 250 $8
11/5 Purchase No. 1 300 $12
11/12 Sale No. 1 (150)
11/18 Purchase No. 2 250 $16
11/25 Sale No. 2 (300)
Answer the following independent questions and show computations supporting your answers.

1. Assume that the company uses the average cost method. What is the dollar value of the ending
inventory on November 30? What is the dollar value of the cost of goods sold during November?

2. Assume that the company uses the FIFO inventory method. What is the dollar value of the ending
inventory on November 30? What is the dollar value of the cost of goods sold during November?

Problem V - Notes Receivable (15 points)

Instructions
Prepare journal entries to record the following events:

Jul. 1 MA Company accepted a 8%, 4-month, $10,000 note dated July 1 from TL Company for
the balance due on TL’s account.

Jul. 31 MA accrued interest on the above note for the month of July.

Page  3  of  4  
 
Oct. 1 Collected TL Company note in full. Assume interest was correctly accrued on August 31
and September 30.

Oct. 1 Assume instead that the note is dishonored and that no interest has been accrued. TL
Company is expected to eventually pay the amount owed.
Problem VI - Plant Asset Disposal Entries (15 points)
Prepare the necessary journal entries to record the following transactions in 2016 for NTTL Co.
March 1 Discarded old store equipment that originally cost $20,000 and had a book value of
$4,000 on the date of disposal. Assume depreciation on the equipment has already
been recorded for the current year.
July 31 Sold a delivery truck for $8,000. The delivery truck originally cost $30,000 and had
accumulated depreciation of $24,000 on the date of sale. Assume the depreciation on
the truck has already been recorded for the current year.
Sept. 30 Equipment with a 4-year useful life was purchased on January 1, 2012, for $16,000
and was sold for $5,000. The equipment had been depreciated using the straight-line
method with an estimated salvage value of $4,000. Depreciation Expense was last
recorded on December 31, 2015.
Problem VII - Depreciation Methods (15 points)
The following information is available for NT&NT Company, which has an accounting year-end
of December 31, 2016.
1. A delivery truck was purchased on June 1, 2015, for $50,000. It was estimated to have a
$5,000 salvage value after being driven 100,000 miles. During 2016, the truck was driven
30,000 miles. The units-of-activity method of depreciation is used.
2. A building was purchased on January 1, 1979, for $8,800,000. It is estimated to have a
$80,000 salvage value at the end of its 40-year useful life. The straight-line method of
depreciation is being used.
3. Store equipment was purchased on January 1, 2015, for $90,000. It was estimated that the
store equipment would have a $9,000 salvage value at the end of its 5-year useful life. The
double-declining-balance method of depreciation is being used.
Instructions
Complete the table shown below by filling in the appropriate amounts and show computations
supporting your answers.
________________________________________________________________________________
Accumulated Depreciation
Depreciation Expense Book Value at
Assets 1/1/16 for 2016 12/31/16
______________________________________________________________________
Delivery truck $ 12,500 $ $
________________________________________________________________________________
Building $8,066,000 $ $
________________________________________________________________________________
Store equipment $ 36,000 $ $
________________________________________________________________________________
THE END.

Page  4  of  4