07:44 20/03/2024 ACC101-Mid-Term Test - ACC101-Mid-Term Test
MINISTRY OF EDUCATION AND TRAINING FPT
UNIVERSITY
SUBJECT: PRINCIPLE OF ACCOUNTING
MID- TERM TEST
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1. Prepare the required journal entries that Maia's Bike Shop must make
to record these
transactions.
2. Prepare the closing entries at December 31 for the current year.
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3. Prepare the closing entries at December 31 for the current year.
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4. From the above adjusted trial balance for the Worker Products Company,
prepare a
multiple-step income statement in good form.
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7. Prepare the journal entries that Steve's Skateboards must make to record
these
transactions.
8. Prepare the required journal entries that Maia's Bike Shop must make to
record these
transactions.
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9. The unadjusted trial balance of Quick Delivery is entered on the partial
work sheet
below. Complete the work sheet using the following information:
(a) Salaries earned by employees that are unpaid and unrecorded, $5,000.
(b) An inventory of supplies showed $1,000 of unused supplies still on hand.
(c) Depreciation on delivery vans, $24,000.
(d) Services paid in advance by customers of $10,000 have now been
provided to
customers.
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Current Liabilities:
Accounts Payable + Salaries Payable = $17,800 + $16,400 = $34,200
Current Ratio = $266,000 / $34,200 = 7.77
With a current ratio of 7.77, Tom Janes Co. has a strong ability to meet its short-term debts.
b. The debt ratio is calculated by dividing total liabilities by total assets:
Debt Ratio = Total Liabilities / Total Assets
Total Liabilities:
Accounts Payable + Salaries Payable + Long-term Note Payable
= $17,800 + $16,400 + $224,000 = $258,200
Total Assets:
Cash + Accounts Receivable + Prepaid Insurance + Office Supplies + Investments in Stocks +
Land + Office Equipment - Accumulated Depreciation - Equipment + Building - Accumulated
Depreciation - Building + Intangible Assets
= $90,000 + $18,000 + $6,000 + $2,000 + $150,000 + $300,000 + $18,000 - $4,000 + $600,000 -
$170,000 + $50,000 = $1,060,000
Debt Ratio = $258,200 / $1,060,000 = 0.243
With a debt ratio of 0.243, Tom Janes Co. has a relatively low level of debt compared to its
assets, indicating a lower financial risk.
c. The owner may need to invest an additional $300,000 in the business for several reasons, such
as funding future expansion plans, purchasing additional equipment, or hiring more employees.
While the business may be profitable, it may need additional capital to sustain its growth and
increase its profitability in the long run. Additionally, the owner may want to take advantage of
new business opportunities or invest in research and development to stay competitive in the
market.
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