A C G 6 0 2 6 - A c c o u n t i n g f o r M a n a g e r s ACCOUNTING CYCLE ASSIGNMENT Spring 2016 Names Points: Problem 1 – 30 points Problem 2 – 70 points Total (100 points) Problem 1. ABC Company began business on January 1, 2015. During January, the following transactions occurred: January: 1 st Issued common stock in exchange for $150,000 cash. 2 nd Purchased inventory on account for $30,000. 4 th Paid an insurance company $2,450 for one-year insurance policy. 10 th Sold merchandise on account for $13,000. The cost of the merchandise was $6,000. 15 th Borrowed $35,000 from a local bank and signed a note. Principal and interest at 10% will be repaid in six months. 20 th Paid employees $6,000 in wages for the first half of the month. 22 nd Sold merchandise for $11,000 cash. The cost of the merchandise was $7,000. 24 th Paid $15,000 to suppliers for the merchandise purchased on January 2. 26 th Collected $5,500 on account from customers. 28 th Paid $2,000 to the local utility company for January water. 30 th Paid $5,000 rent for the building. $2,500 was for January rent, and $2,500 for February rent. Required: 1. Prepare general journal entries (i.e., no adjusting journal entries) to record each transaction. (10p.) 2. Post the entries to T-accounts. (10p.) 3. Prepare an unadjusted trial balance as of January 30, 2015. (10p.) Problem 2. Florida Company manufactures and sells various types of pasta to grocery chains as private label brands. The company's fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2015, appears below. Information necessary to prepare the year-end adjusting entries appears below. 1. Depreciation on the equipment for the year is $20,000. 2. Employee wages are paid twice a month, on the 22 nd for wages earned from the 1 st through the 15 th , and on the 7 th of the following month for wages earned from the 16 th through the end of the month. Wages earned from December 16 through December 31, 2015, were $2,000. 3. On October 1, 2015, Florida borrowed $50,000 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years. 4. On March 1, 2015, the company lent a supplier $20,000 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2016. Account Title Debit Credit Cash 29,000 Accounts Receivable 40,000 Supplies 1,500 Inventory 60,000 Notes Receivable 20,000 Interest Receivable - Prepaid Rent 2,000 Prepaid Insurance 7,000 Equipment 80,000 Accumulated Depreciation-Equipment 30,000 Accounts Payable 31,000 Wages Payable - Notes Payable 50,000 Interest Payable - Unearned Rev.

1. A C G 6 0 2 6 - A c c o u n t i n g f o r M a n a g e r s
ACCOUNTING CYCLE ASSIGNMENT
Spring 2016
Names
Points:
Problem 1 – 30 points
Problem 2 – 70 points
Total (100 points)

2. Problem 1. ABC Company began business on January 1, 2015.
During January, the following
transactions occurred:
January:
1
st
Issued common stock in exchange for $150,000 cash.
2
nd
Purchased inventory on account for $30,000.
4
th
Paid an insurance company $2,450 for one-year insurance
policy.
10
th
Sold merchandise on account for $13,000. The cost of the

3. merchandise was $6,000.
15
th
Borrowed $35,000 from a local bank and signed a note.
Principal and interest at 10%
will be repaid in six months.
20
th
Paid employees $6,000 in wages for the first half of the month.
22
nd
Sold merchandise for $11,000 cash. The cost of the
merchandise was $7,000.
24
th
Paid $15,000 to suppliers for the merchandise purchased on
January 2.
26
th
Collected $5,500 on account from customers.
28
th
Paid $2,000 to the local utility company for January water.

4. 30
th
Paid $5,000 rent for the building. $2,500 was for January rent,
and $2,500 for
February rent.
Required:
1. Prepare general journal entries (i.e., no adjusting journal
entries) to record each
transaction. (10p.)
2. Post the entries to T-accounts. (10p.)
3. Prepare an unadjusted trial balance as of January 30, 2015.
(10p.)
Problem 2.
Florida Company manufactures and sells various types of pasta
to grocery chains as private label

5. brands. The company's fiscal year-end is December 31. The
unadjusted trial balance as of
December 31, 2015, appears below.
Information necessary to prepare the year-end adjusting entries
appears below.
1. Depreciation on the equipment for the year is $20,000.
2. Employee wages are paid twice a month, on the 22
nd
for wages earned from the 1
st
through the 15
th
, and on the 7
th
of the following month for wages earned from the 16
th
through the end of the month. Wages earned from December 16
through December 31,
2015, were $2,000.
3. On October 1, 2015, Florida borrowed $50,000 from a local
bank and signed a note. The
note requires interest to be paid annually on September 30 at

6. 12%. The principal is due in
10 years.
4. On March 1, 2015, the company lent a supplier $20,000 and a
note was signed requiring
principal and interest at 8% to be paid on February 28, 2016.
Account Title Debit Credit
Cash 29,000
Accounts Receivable 40,000
Supplies 1,500
Inventory 60,000
Notes Receivable 20,000
Interest Receivable -
Prepaid Rent 2,000
Prepaid Insurance 7,000
Equipment 80,000
Accumulated Depreciation-Equipment 30,000
Accounts Payable 31,000
Wages Payable -
Notes Payable 50,000

7. Interest Payable -
Unearned Revenue -
Common Stock 60,000
Retained Earnings 24,500
Sales Revenue 148,000
Interest Revenue -
Cost of Goods Sold 70,000
Wages Expense 18,900
Rent Expense 11,000
Depreciation Expense -
Interest Expense -
Supplies Expense 1,100
Insurance Expense -
Advertising Expense 3,000
Totals 343,500 343,500
5. On April 1, 2015, the company paid an insurance company
$7,000 for a two-year fire

8. insurance policy.
6. $800 of supplies remained on hand at December 31, 2015.
7. A customer paid Florida $2,000 in December for 1,500
pounds of spaghetti to be
manufactured and delivered in January 2016.
8. On December 1, 2015, $2,000 rent was paid to the owner of
the building. The payment
represented rent for December and January 2016, at $1,000 per
month.
Required:
1. Prepare the necessary December 31, 2015 adjusting journal
entries. (25p.)
2. Enter the unadjusted balances from the trial balance into T-
accounts. (5p.)
3. Post the adjusting entries prepared in (1) to the accounts.
(10p.)
4. Prepare an adjusted trial balance. (5p.)
5. Prepare closing entries and post to the accounts. (15p.)
6. Prepare a post-closing trial balance. (10p.)