1. (1 point) Trenton Travel Agency purchased land for $90,000 cash on December 10, 2014. At December 31, 2014, the land’s value has increased to $93,000. What amount should be reported for land on Trenton’s balance sheet at December 31, 2014? 2. (2 points) Saylor Enterprises had a capital balance of $168,000 at the beginning of the period. At the end of the accounting period, the capital balance was $198,000. a. Assuming no additional investment or withdrawals during the period, what is the net income for the period? b. Assuming an additional investment of $13,000 but no withdrawals during the period, what is the net income for the period? 3. (4 points) Transactions for the Jo Smith Company for the month of June are presented below. June 1 4. Jo Smith invests $5,792 cash in a small welding business of which he is the sole proprietor. 2 5. Purchases equipment on account for $1,854. 3 6. $714 cash is paid to landlord for June rent. 12 7. Sends a bill to M. Rodero for $497 for welding work performed on account. Journalize the transactions.  4. (6 points) The following accounts are taken from the ledger of Chloe Company at December 31, 2014. 200 Notes Payable $21,670 101 Cash $7,667 301 Owner’s Capital 29,664 126 Supplies 4,333 157 Equipment 81,667 729 Rent Expense 5,667 306 Owner’s Drawings 9,667 212 Salaries and Wages Payable 4,667 726 Salaries and Wages Expense 39,667 201 Accounts Payable 12,667 400 Service Revenue 89,667 112 Accounts Receivable 9,667 Prepare a trial balance in good form. 5. (5 points) The Green Thumb Lawn Care Company began operations on April 1. At April 30, the trial balance shows the following balances for selected accounts. Prepaid Insurance $ 3,700 Equipment 27,800 Notes Payable 21,500 Unearned Service Revenue 4,500 Service Revenue 1,600 Analysis reveals the following additional data. 1. Prepaid insurance is the cost of a 1-year insurance policy, effective April 1. 2. Depreciation on the equipment is $500 per month. 3. The note payable is dated April 1. It is a 6-month, 12% note. 4. Seven customers paid for the company’s 6-month lawn service package of $410 beginning in April. The company performed services for these customers in April. 5. Lawn services performed for other customers but not recorded at April 30 totaled $1,600. Prepare the adjusting entries for the month of April. 6. (16 points) Natalie owns Cookie Creations. After journalizing and posting the December transactions and adjusting entries, Natalie prepared the following adjusted trial balance. COOKIE CREATIONS Adjusted Trial Balance December 31, 2013 Debit Credit Cash $1,180 Accounts Receivable 875 Supplies 350 Prepaid Insurance 1,210 Equipment 1,200 Accumulated Depreciation—Equipment $40 Accounts Payable 75 Salaries and Wages Payable 56 Interest Payable 15 Unearned Service Revenue 300 Notes Payable 2,000 Owner’s Cap.

1. 1.
(1 point) Trenton Travel Agency purchased land for $90,000
cash on December 10, 2014. At December 31, 2014, the land’s
value has increased to $93,000. What amount should be reported
for land on Trenton’s balance sheet at December 31, 2014?
2.
(2 points) Saylor Enterprises had a capital balance of $168,000
at the beginning of the period. At the end of the accounting
period, the capital balance was $198,000.
a.
Assuming no additional investment or withdrawals during the
period, what is the net income for the period?
b.
Assuming an additional investment of $13,000 but no
withdrawals during the period, what is the net income for the
period?
3.
(4 points) Transactions for the Jo Smith Company for the month
of June are presented below.

2. June 1
4.
Jo Smith invests $5,792 cash in a small welding business of
which he is the sole proprietor.
2
5.
Purchases equipment on account for $1,854.
3
6.
$714 cash is paid to landlord for June rent.
12
7.
Sends a bill to M. Rodero for $497 for welding work performed
on account.
Journalize the transactions.
4.
(6 points) The following accounts are taken from the ledger of
Chloe Company at December 31, 2014.

3. 200
Notes Payable
$21,670
101
Cash
$7,667
301
Owner’s Capital
29,664
126
Supplies
4,333
157
Equipment
81,667
729
Rent Expense
5,667
306

4. Owner’s Drawings
9,667
212
Salaries and Wages Payable
4,667
726
Salaries and Wages Expense
39,667
201
Accounts Payable
12,667
400
Service Revenue
89,667
112
Accounts Receivable
9,667
Prepare a trial balance in good form.

5. 5.
(5 points) The Green Thumb Lawn Care Company began
operations on April 1. At April 30, the trial balance shows the
following balances for selected accounts.
Prepaid Insurance
$ 3,700
Equipment
27,800
Notes Payable
21,500
Unearned Service Revenue
4,500
Service Revenue
1,600
Analysis reveals the following additional data.
1.
Prepaid insurance is the cost of a 1-year insurance policy,
effective April 1.

6. 2.
Depreciation on the equipment is $500 per month.
3.
The note payable is dated April 1. It is a 6-month, 12% note.
4.
Seven customers paid for the company’s 6-month lawn service
package of $410 beginning in April. The company performed
services for these customers in April.
5.
Lawn services performed for other customers but not recorded
at April 30 totaled $1,600.
Prepare the adjusting entries for the month of April.
6.
(16 points) Natalie owns Cookie Creations.
After journalizing and posting the December transactions and
adjusting entries, Natalie prepared the following adjusted trial
balance.
COOKIE CREATIONS
Adjusted Trial Balance
December 31, 2013

7. Debit
Credit
Cash
$1,180
Accounts Receivable
875
Supplies
350
Prepaid Insurance
1,210
Equipment
1,200
Accumulated Depreciation—Equipment

8. $40
Accounts Payable
75
Salaries and Wages Payable
56
Interest Payable
15
Unearned Service Revenue
300
Notes Payable
2,000
Owner’s Capital
800
Owner’s Drawings
500

9. Service Revenue
4,515
Salaries and Wages Expense
1,006
Utilities Expense
125
Advertising Expense
165
Supplies Expense
1,025
Depreciation Expense
40
Insurance Expense
110
Interest Expense

10. 15
$7,801
$7,801
Using the information in the adjusted trial balance, do the
following.
Prepare an income statement for the period ended December 31,
2013.
Prepare an owner’s equity statement for the period ended
December 31, 2013.
Natalie has decided that her year-end will be December 31,
2013. Prepare closing entries as of December 31, 2013.
Prepare a post-closing trial balance.
7. (15 points)
Because Natalie has had such a successful first few months, she
is considering other opportunities to develop her business. One
opportunity is the sale of fine European mixers. The owner of
Kzinski Supply Co. has approached Natalie to become the
exclusive distributor of these fine mixers in her state. The
current cost of a mixer is approximately $575, and Natalie
would sell each one for $1,150. Natalie comes to you for advice
on how to account for these mixers. Each appliance has a serial

11. number and can be easily identified. The trial balance for
cookie creations as on December 31, 2011 is as follows:
COOKIE CREATIONS
Trial Balance
December 31, 2011
Account
Debit
Credit
Cash
$1,180
Accounts Receivable
875
Supplies
350
Prepaid Insurance
1,210
Equipment
1,200

12. Accumulated Depreciation, Equipment
$40
Accounts Payable
75
Salaries and Wages Payable
56
Unearned Service Revenue
300
Interest Payable
15
Notes Payable
2,000
Owner’s Capital
2,329

13. $4,815
$4,815
In the end, Natalie decides to use the perpetual inventory
system. The following transactions happen during the month of
January.
Jan. 4
Bought five deluxe mixers on account from Kzinski Supply Co.
for $2,875, FOB shipping point, terms n/30.
6
Paid $100 freight on the January 4 purchase.
7
Returned one of the mixers to Kzinski because it was damaged
during shipping. Kzinski issues Cookie Creations credit for the
cost of mixer plus $20 for the cost of freight that was paid on
January 6 for one mixer.
8
Collected $375 of the accounts receivable from December 2011.
12
Three deluxe mixers are sold on account for $3,450, FOB
destination, terns n/30. (Cost of goods sold is $595 per mixer.)
14
Paid the $75 of delivery charges for the three mixers that were
sold on January 12.
14
Bought four deluxe mixers on account from Kzinski Supply Co.
for $2,300, FOB shipping point, terms n/30.

14. 17
Natalie is concerned that there is not enough cash available to
pay for all of the mixers purchased. She invests an additional
$1,000 cash in Cookie Creations.
18
Paid $80 freight on the January 14 purchase.
20
Sold two deluxe mixers for $2,300 cash. (Cost of goods sold is
$595 per mixer.)
28
Natalie issued a check to her assistant for all the help the
assistant has given her during the month. Her assistant worked
20 hours in January and is also paid the $56 owed at December
31, 2011. (Natalie’s assistant earns $8 an hour.)
28
Collected the amounts due from customers for the January 12
transaction.
30
Paid a $145 cellphone bill ($75 for the December 2011 account
payable and $70 for the month of January). (Recall that the
cellphone is used only for business purposes.)
31
Paid Kzinski all amounts due.
31
Natalie withdrew $750 cash for personal use.

15. Prepare the January transactions.
8.
(21 points)
Natalie is busy establishing both divisions of her business
(cookie classes and mixer sales) and completing her business
degree. Her goals for the next 11 months are to sell one mixer
per month and to give two to three classes per week.
The cost of the fine European mixers is expected to increase.
Natalie has just negotiated new terms with Kzinski that include
shipping costs in the negotiated purchase price (mixers will be
shipped FOB destination). Assume that Natalie has decided to
use a periodic inventory system and now must choose a cost
flow assumption for her mixer inventory.
Inventory as on January 31, 2014 represents three deluxe mixer
purchased at a unit cost of $545.
The following transactions occur in February to May 2014.

16. Feb. 2
Natalie buys two deluxe mixers on account from Kzinski Supply
Co. for $1,200 ($600 each), FOB destination, terms n/30.
16
She sells one deluxe mixer for $1,150 cash.
25
She pays the amount owed to Kzinski.
Mar. 2
She buys one deluxe mixer on account from Kzinski Supply Co.
for $618, FOB destination, terms n/30.
30
Natalie sells two deluxe mixers for a total of $2,300 cash.
31
She pays the amount owed to Kzinski.
Apr. 1
She buys two deluxe mixers on account from Kzinski Supply
Co. for $1,224 ($612 each), FOB destination, terms n/30.
13
She sells three deluxe mixers for a total of $3,450 cash.
30
Natalie pays the amounts owed to Kzinski.
May 4
She buys three deluxe mixers on account from Kzinski Supply
Co. for $1,875 ($625 each), FOB destination, terms n/30.
27

17. She sells one deluxe mixer for $1,150 cash.
Determine the cost of goods available for sale
Calculate (i) ending inventory, (ii) cost of goods sold, (iii)
gross profit, and (iv) gross profit rate under each of the
following methods: LIFO, FIFO, and average cost.
(Round unit cost calculation in average cost method to 3
decimal places, e.g. 2.225. Round gross profit rate to 2 decimal
places, e.g. 25.22%. Round all other answers to 0 decimal
places, e.g. 2,525.)