Baruch College – CUNY

Stan Ross Department of Accountancy

Accountancy 3000 - Section TR24 –A

Fall 2003 – Prof Jan Sweeney

Quiz 1 - Solution

Q1 Part A or B Adjusting Entries (8 points)

a. Depreciation Expense .......................................................................... 12,500

Accumulated Depreciation of F. & E. .................................................. 12,500

b. Insurance Expense ................................................................................. 2,400

Prepaid Insurance ............................................................................... 2,400

c. Interest Receivable ................................................................................... 900

Interest Revenue ................................................................................. 900

d. Salaries Expense .................................................................................... 5,000

Salaries Payable ................................................................................. 5,000

Part B Closing Entries (8 points)

Revenues ................................................................................................. 266.000

Income Summary ...................................................................................... 266,000

Income Summary ..................................................................................... 230,800

Salaries Expense ....................................................................................... 145,000

Rent Expense ........................................................................................... 22,800

Other Expenses......................................................................................... 63,500

Income Summary ....................................................................................... 35,200

Retained Earnings ..................................................................................... 35,200

Q2 (14 points)

Flynn Beef Company

INCOME STATEMENT

For the Year Ended December 31, 2002

Sales $1,400,000

Cost of goods sold 820,000

Gross profit 580,000

Selling and administrative expenses 240,000

Income from operations 340,000

Other revenue 60,000

Other expenses (50,000)

Income before taxes, discontinued operation and extraordinary item 350,000

Income taxes (105,000)

Income before discontinued operation 245,000

Gain on Sale from Discontinued Operation net of

applicable income taxes of $75,000 175,000

Net income $ 420,000

Per share of common stock—

Income before extraordinary item $4.90

Extraordinary item, net of tax 3.50*

Net income $8.40

*(This figure is optional.)

Baruch College – CUNY

Stan Ross Department of Accountancy

Accountancy 3000 - Section TR24 –A

Fall 2003 – Prof Jan Sweeney

Quiz 1 - Solution

Q 1Part A Closing Entries (8 points)

Revenues ................................................................................................. 266.000

Income Summary ...................................................................................... 266,000

Income Summary ..................................................................................... 230,800

Salaries Expense ....................................................................................... 145,000

Rent Expense ........................................................................................... 22,800

Other Expenses......................................................................................... 63,500

Income Summary ....................................................................................... 35,200

Retained Earnings ..................................................................................... 35,200

Q Part B Adjusting Entries (8 points)

a. Depreciation Expense .......................................................................... 12,500

Accumulated Depreciation of F. & E. .................................................. 12,500

b. Insurance Expense ................................................................................. 2,400

Prepaid Insurance ............................................................................... 2,400

c. Interest Receivable ................................................................................... 900

Interest Revenue ................................................................................. 900

d. Salaries Expense .................................................................................... 5,000

Salaries Payable ................................................................................. 5,000

Q2 (14 points)

Flynn Beef Company

INCOME STATEMENT

For the Year Ended December 31, 2002

Sales $1,400,000

Cost of goods sold 820,000

Gross profit 580,000

Selling and administrative expenses 240,000

Income from operations 340,000

Other revenue 60,000

Other expenses (50,000)

Income before taxes, discontinued operation and extraordinary item 350,000

Income taxes (105,000)

Income before discontinued operation 245,000

Gain on Sale from Discontinued Operation net of

applicable income taxes of $75,000 175,000

Net income $ 420,000

Per share of common stock—

Income before extraordinary item $4.90

Extraordinary item, net of tax 3.50*

Net income $8.40

*(This figure is optional.)

Baruch College – CUNY

Stan Ross Department of Accountancy

Accountancy 3000 - Section TR24 –C

Fall 2003 – Prof Jan Sweeney

Quiz 1 - Solution

Q1 Part A Adjusting Entries (8 points)

a. Depreciation Expense .......................................................................... 15,000

Accumulated Depreciation of F. & E. .................................................. 15,000

b. Interest Receivable ................................................................................... 900

Interest Revenue ................................................................................. 900

d. Prepaid Rent ...................................................................................... 3,000

Rent Expense ..................................................................................... 3,000

e. Salaries Expense .................................................................................... 4,000

Salaries Payable ................................................................................. 4,000

Part B Closing Entries (8 points)

Sales .................................................................................................... 266.000

Income Summary ...................................................................................... 266,000

Income Summary .................................................................................... 230,800

Salaries Expense ....................................................................................... 163,000

Rent Expense ........................................................................................... 22,800

Other Expenses......................................................................................... 45,000

Income Summary ....................................................................................... 35,200

Retained Earnings ..................................................................................... 35,200

Q2 (14 points)

Flynn Beef Company

INCOME STATEMENT

For the Year Ended December 31, 2002

Sales $1,400,000

Cost of goods sold 820,000

Gross profit 580,000

Selling and administrative expenses 240,000

Income from operations 340,000

Other revenue 60,000

Other expenses (50,000)

Income before taxes, discontinued operation and extraordinary item 350,000

Income taxes (105,000)

Income before discontinued operation 245,000

Gain on Sale from Discontinued Chicken Operation net of

applicable income taxes of $90,000 210,000

Net income $ 455,000

Per share of common stock—

Income before extraordinary item $4.90

Extraordinary item, net of tax 4.20*

Net income $9.10

*(This figure is optional.)

Baruch College – CUNY

Stan Ross Department of Accountancy

Accountancy 3000 - Section TR24 –D

Fall 2003 – Prof Jan Sweeney

Quiz 1 - Solution

Q1 Part A Closing Entries (8 points)

Sales .................................................................................................... 266.000

Income Summary ...................................................................................... 266,000

Income Summary ..................................................................................... 230,800

Salaries Expense ....................................................................................... 163,000

Rent Expense ........................................................................................... 22,800

Other Expenses......................................................................................... 45,000

Income Summary ....................................................................................... 35,200

Retained Earnings ..................................................................................... 35,200

Part B Adjusting Entries (8 points)

a. Depreciation Expense .......................................................................... 15,000

Accumulated Depreciation of F. & E. .................................................. 15,000

b. Interest Receivable ................................................................................... 900

Interest Revenue ................................................................................. 900

d. Prepaid Rent ...................................................................................... 3,000

Rent Expense ..................................................................................... 3,000

e. Salaries Expense .................................................................................... 4,000

Salaries Payable 4,000

Q2 (14 points)

Flynn Beef Company

INCOME STATEMENT

For the Year Ended December 31, 2002

Sales $1,400,000

Cost of goods sold 820,000

Gross profit 580,000

Selling and administrative expenses 240,000

Income from operations 340,000

Other revenue 60,000

Other expenses (50,000)

Income before taxes, discontinued operation and extraordinary item 350,000

Income taxes (105,000)

Income before discontinued operation 245,000

Gain on Sale from Discontinued Chicken Operation net of

applicable income taxes of $90,000 210,000

Net income $ 455,000

Per share of common stock—

Income before extraordinary item $4.90

Extraordinary item, net of tax 4.20*

Net income $9.10

*(This figure is optional.)