Kiara-Mid term 1

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1. Award: 10 out of 10.00 points 10 out of 10.00 points Score: Score: 10/10 Points 100 % Sample Question: Complex Category Sample Question: Complex Category Pool Corporation is the world’s largest wholesale distributor of swimming pool supplies and equipment & services. It sells these products to swimming pool repair and service businesses like Penny’s Pool Service & Supply Inc., swimming pool builders, and retail swimming pool stores. The majority of these customers are small, family-owned businesses like Penny’s. Its trial balance for the last year ended December 31, 2019 is presented below: Account Titles Debit Credit Cash and cash equivalents $ 560,000 Accounts receivable 65,000 Supplies 25,000 Product inventory 125,000 Prepaid insurance 20,000 Equipment 143,000 Other non-current assets, net 2,000 Accumulated depreciation $ 21,000 Accounts payable 25,000 Interest payable 0 Rent payable 0 Wages payable 7,000 Property tax payable 12,000 Long term notes payable 30,000 Capital 500,000 Retained earnings 345,000 $ 940,000 $ 940,000 The following transactions occurred during the financial year 2020: a. A retail pool customer pays his outstanding balance of $9,400 to Pool Corporation. b. Supplies purchased in Cash amounting $520. c. Pool Corporation purchases Product Inventory in Cash amounting to $37,400. d. Paid wages in cash amounting to $8,300. e. Pool Corporation purchased equipment worth $23,000 and paid immediately. f. Pool Corporation paid $2,400 cash for the premium on a 12th month insurance policy beginning from December 2020. g. Pool Corporation paid $200 towards general repairs in cash. h. Pool Corporation paid $3,100 cash towards Utilities. i. Pool Corporation paid $260 towards transportation for one of the equipment as per the sale agreement. j. Pool Corporation purchased Product Inventory for $29,000 Cash. k. Pool Corporation owed $1,000 wages to the office receptionist and three assistants for working the last two days in December 2020. The employees will be paid in January 2021. l. On October 1, 2020, Pool Corporation received $24,000 from customers who prepaid pool cleaning service for one year beginning on November 1, 2020. m. Pool Corporation received a $670 utility bill for December utility usage. It will be paid in January 2021. n. Pool Corporation borrowed $28,500 from a local bank on May 1, 2020, signing a note with a 6 percent interest rate. The note and interest are due on May 1, 2021. o. On December 31, 2020, Pool Corporation cleaned and winterized a customer’s pool for $11,900, but the service was not yet recorded on December 31. p. On August 1, 2020, Pool Corporation purchased a two-year insurance policy for $5,160, with coverage beginning on that date. q. During 2020, Pool Corporation purchased supplies costing $25,000 from various suppliers for cash.

r. Pool Corporation estimated that depreciation on its buildings and equipment was $9,300 for the year. s. At December 31, 2020, $1,500 of interest on investments was earned that will be received in 2021. t. Rent for December due to be paid in January 2020 of $1,800. u. Sold $19,000 of goods and received the amount on the same day. v. Record the expired insurance purchased (trans. f) for the month of December. w. Sales worth $46,000 made to Penny’s Pool Service & Supply Inc. on Credit. x. Pool Corporation received utilities bill for $540 for December. Paid in cash when received. y. Property tax paid $3,000 during the year. z. Received partial payment from Penny’s Pool Service & Supply Inc amounting to $23,000 for the purchase made this year. (tras."w") a1. Pool Corporation purchased equipment worth $5,000 on credit basis. b2. Pool Corporation received the remaining balance amount due towards the recent sale made to Penny’s Pool Service & Supply Inc. (trans "w") c3. Paid for the equipment purchased. (tran. A1) d4. On December 31, 2020, Pool Corporation had $26,000 of pool cleaning supplies on hand. Record the necessary adjusting entry. e5. Property tax due and payable worth $13,000. e6. Recognize revenue earned (transaction L) e7. Record interest accrued on bank loan (Transaction N). e8. Record the adjusting entry to record expired insurance (Transaction P). Required: 1. Post the required entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 2. Post the entries and their balances to their respective T-accounts. 3. Prepare Adjusted Trial Balance. 4. Prepare Income Statement.

5. Prepare Statement of Owner's Equity. 6. Prepare Balance Sheet. (Input all amounts as positive values.) Pool Corporation Income Statement For year ended December 31, 2020 Revenue: Sales  $ 80,900  Interest revenue  1,500  $ 82,400 Expenses: Supplies expense  24,520  Depreciation expense  9,300  Transportation expense  260  Interest expense  1,140  Utilities expense  4,310  Property tax expense  16,000  Wages expense  9,300  Insurance expense  1,275  Rent expense  1,800  Repair expense  200  68,105 Net income  $ 14,295 Pool Corporation Statement of Owner's equity For year ended December 31, 2020 Capital $ 500,000  Add: Net income  $ 14,295  Add: Retained earnings  $ 345,000  359,295 Ending $ 859,295

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7. Post the closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first $ $ $ Pool Corporation Balance Sheet For year ended December 31, 2020 Assets Current Assets Cash and cash equivalents 544,020 Accounts receivable 67,500 Interest receivable 1,500 Supplies 26,000 Product inventory 191,400 Prepaid insurance 26,285 Total Current Assets Non-Current Assets Equipment 171,000 Less: Accumulated Depreciation 30,300 140,700 Other non-current assets, net 2,000 Total Non-Current Assets Total Assets Liabilities Current Liabilities Accounts payable 25,000 Interest payable 1,140 Rent payable 1,800 Wages payable 8,000 Utilities payable 670 Property tax payable 25,000 Short term borrowings 28,500 Deferred revenue 20,000 Total Current Liabilities Non-Current Liabilities Long term notes payable 30,000 Total Non-Current liabilities Total Liabilities Owner's Equity Capital 500,000 Retained earnings 359,295 Total Owner's Equity Total Liabilities & Equity $ 856,705 $ 142,700 $ 999,405 $ 110,110 $ 30,000 $ 140,110 $ 859,295 $ 999,405

account field.) References Worksheet Sample Question: Complex Category Sample Question: Complex Category Sample Question: Complex Category Pool Corporation is the world’s largest wholesale distributor of swimming pool supplies and equipment & services. It sells these products to swimming pool repair and service businesses like Penny’s Pool Service & Supply Inc., swimming pool builders, and retail swimming pool stores. The majority of these customers are small, family-owned businesses like Penny’s. Its trial balance for the last year ended December 31, 2019 is presented below: Account Titles Debit Credit Cash and cash equivalents $ 560,000 Accounts receivable 65,000 Supplies 25,000 Product inventory 125,000 Prepaid insurance 20,000 Equipment 143,000 No Transaction General Journal Debit Credit A 1 Sales  80,900  Interest revenue  1,500  Income summary  82,400  B 2 Income summary  68,105  Supplies expense  24,520  Depreciation expense  9,300  Wages expense  9,300  Insurance expense  1,275  Rent expense  1,800  Interest expense  1,140  Utilities expense  4,310  Property tax expense  16,000  Repair expense  200  Transportation expense  260  C 3 Income summary  14,295  Retained earnings  14,295 

Other non-current assets, net 2,000 Accumulated depreciation $ 21,000 Accounts payable 25,000 Interest payable 0 Rent payable 0 Wages payable 7,000 Property tax payable 12,000 Long term notes payable 30,000 Capital 500,000 Retained earnings 345,000 $ 940,000 $ 940,000 The following transactions occurred during the financial year 2020: a. A retail pool customer pays his outstanding balance of $9,400 to Pool Corporation. b. Supplies purchased in Cash amounting $520. c. Pool Corporation purchases Product Inventory in Cash amounting to $37,400. d. Paid wages in cash amounting to $8,300. e. Pool Corporation purchased equipment worth $23,000 and paid immediately. f. Pool Corporation paid $2,400 cash for the premium on a 12th month insurance policy beginning from December 2020. g. Pool Corporation paid $200 towards general repairs in cash. h. Pool Corporation paid $3,100 cash towards Utilities. i. Pool Corporation paid $260 towards transportation for one of the equipment as per the sale agreement. j. Pool Corporation purchased Product Inventory for $29,000 Cash. k. Pool Corporation owed $1,000 wages to the office receptionist and three assistants for working the last two days in December 2020. The employees will be paid in January 2021. l. On October 1, 2020, Pool Corporation received $24,000 from customers who prepaid pool cleaning service for one year beginning on November 1, 2020. m. Pool Corporation received a $670 utility bill for December utility usage. It will be paid in January 2021. n. Pool Corporation borrowed $28,500 from a local bank on May 1, 2020, signing a note with a 6 percent interest rate. The note and interest are due on May 1, 2021. o. On December 31, 2020, Pool Corporation cleaned and winterized a customer’s pool for $11,900, but the service was not yet recorded on December 31. p. On August 1, 2020, Pool Corporation purchased a two-year insurance policy for $5,160, with coverage beginning on that date. q. During 2020, Pool Corporation purchased supplies costing $25,000 from various suppliers for cash. r. Pool Corporation estimated that depreciation on its buildings and equipment was $9,300 for the year. s. At December 31, 2020, $1,500 of interest on investments was earned that will be received in 2021. t. Rent for December due to be paid in January 2020 of $1,800. u. Sold $19,000 of goods and received the amount on the same day. v. Record the expired insurance purchased (trans. f) for the month of December. w. Sales worth $46,000 made to Penny’s Pool Service & Supply Inc. on Credit. x. Pool Corporation received utilities bill for $540 for December. Paid in cash when received. y. Property tax paid $3,000 during the year. z. Received partial payment from Penny’s Pool Service & Supply Inc amounting to $23,000 for the purchase made this year. (tras."w") a1. Pool Corporation purchased equipment worth $5,000 on credit basis. b2. Pool Corporation received the remaining balance amount due towards the recent sale made to Penny’s Pool Service & Supply Inc. (trans "w") c3. Paid for the equipment purchased. (tran. A1) d4. On December 31, 2020, Pool Corporation had $26,000 of pool cleaning supplies on hand. Record the necessary adjusting entry. e5. Property tax due and payable worth $13,000. e6. Recognize revenue earned (transaction L) e7. Record interest accrued on bank loan (Transaction N). e8. Record the adjusting entry to record expired insurance (Transaction P). Required: 1. Post the required entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction General Journal Debit Credit 1 a Cash 9,400 Accounts receivable 9,400 2 b Supplies 520 Cash 520

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3 c Product inventory 37,400 Cash 37,400 4 d Wages expense 8,300 Cash 8,300 5 e Equipment 23,000 Cash 23,000 6 f Prepaid insurance 2,400 Cash 2,400 7 g Repair expense 200 Cash 200 8 h Utilities expense 3,100 Cash 3,100 9 i Transportation expense 260 Cash 260 10 j Product inventory 29,000 Cash 29,000 11 k Wages expense 1,000 Wages payable 1,000 12 l Cash 24,000 Deferred revenue 24,000 13 m Utilities expense 670 Utilities payable 670 14 n Cash 28,500 Short term borrowings 28,500 15 o Accounts receivable 11,900 Sales 11,900 16 p Prepaid insurance 5,160 Cash 5,160 17 q Supplies 25,000 Cash 25,000 18 r Depreciation expense 9,300 Accumulated depreciation 9,300 19 s Interest receivable 1,500 Interest revenue 1,500

20 t Rent expense 1,800 Rent payable 1,800 21 u Cash 19,000 Sales 19,000 22 v Insurance expense 200 Prepaid insurance 200 23 w Accounts receivable 46,000 Sales 46,000 24 x Utilities expense 540 Cash 540 25 y Property tax expense 3,000 Cash 3,000 26 z Cash 23,000 Accounts receivable 23,000 27 a1 Equipment 5,000 Accounts payable 5,000 28 b2 Cash 23,000 Accounts receivable 23,000 29 c3 Accounts payable 5,000 Cash 5,000 30 d4 Supplies expense 24,520 Supplies 24,520 31 e5 Property tax expense 13,000 Property tax payable 13,000 32 e6 Deferred revenue 4,000 Sales 4,000 33 e7 Interest expense 1,140 Interest payable 1,140 34 e8 Insurance expense 1,075 Prepaid insurance 1,075

2. Post the entries and their balances to their respective T-accounts.

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