Answer Key Pre Test Cash and Accrual

PROBLEM 1
PREPAID INSURANCE
DEBIT CREDIT
Jan. 1 Beg. Balanc 1,500.00 Accrual 15,700.00
Payment 15,400.00
Dec. 31 Ending Balance 1,200.00
Beg. Balance 1,500.00

Add: Payment 15,400.00
Total 16,900.00
Less: Ending Balance 1,200.00
1 Accrual 15,700.00
INTEREST RECEIVABLE
DEBIT CREDIT
Jan. 1 Beg. Balanc 2,900.00 Interest collected 30,900.00
Interest Revenue 31,700.00
Dec. 31 Ending Balance 3,700.00
Ending Balance 3,700.00

Interest collected 30,900.00
Total 34,600.00
Less: Beginning Balance 2,900.00
2 Interest revenue 31,700.00
Salary Payable
DEBIT CREDIT
Jan. 1 10,600.00
Salaries Paid 135,200.00 136,900.00
Dec. 31 Ending Bala 12,300.00
Expenses paid 135,200.00

Salary payable ending 12,300.00
Total 147,500.00
Less: Beginning Balance 10,600.00
2 Interest revenue 136,900.00
PROBLEM 2
April 1, 2021 Payment of insurance 90,000.00
Divided 3 years (36 months) 36.00
Amortization per month 2,500.00
April 1, 2021 Payment of insurance 90,000.00
LessL Insurance Expense 2,500.00
4 April 30. Prepaid Insurance 87,500.00
Prepaid Insurance - Unadjusted balance 5,000.00

Add: Insurance Expense 87,500.00
Total 92,500.00
Less: Prepaid Insurance, end (adjusted) 87,500.00
5 Insurance expense - adjustment 5,000.00
PROBLEM 3
Salary Payable
DEBIT CREDIT
Jan. 1 400,000.00
Salaries Paid 3,900,000.00 Salaries Expense 4,200,000.00
Dec. 31 Ending Bala 700,000.00
Accrued salary payable beg. 400,000.00

Add: salaries Espense 4,200,000.00
Total 4,600,000.00
Less: Salaries paid 3,900,000.00
Accrued salary payable end. 700,000.00
PROBLEM 4
Sales, Cash Basis 4,000,000.00
Add: Accounts Receivable Beg. 250,000.00
Prior Period Error 40,000.00
Total 4,290,000.00
Less: Accounts Receivable, end 200,000.00
7 Sales, Accrual Basis 4,090,000.00
Purchases, Cash basis 2,000,000.00

Add: Accounts Payable Beg 280,000.00
Total 2,280,000.00
Less: Accounts Payable End 350,000.00
Error 100,000.00
8 Purchases, Accrual Basis 1,830,000.00
Add: Inventory Beg. 150,000.00
Total Goods available for sale 1,980,000.00
Less: Inventory End. 210,000.00
9 Cost of Goods Sold 1,770,000.00
Exepenses - Cash basis 1,500,000.00

Add: Accrued Expenses, beginning 100,000.00
Total 1,600,000.00
Less: Expenses end 70,000.00
10 Salaries Expenses-Accrual 1,530,000.00
Retained Earnigns, unadjusted 600,000.00

Adjustments
Sales earned 200,000.00
Sales adjustment (40,000.00)
Unrecorded Purchases (350,000.00)
Accrued Expenses (70,000.00)
Unrecorded Inventory 150,000.00
Unrecorded Depreciation (310,000.00)
11 Retained Earnings, Adjusted 180,000.00
PROBLEM 5
Accounts Receivable End 250,000.00
Notes Receivable End 150,000.00
Collections of Accounts Receivable 1,800,000.00
Collections of Notes Receivable 80,000.00
Sales Return 40,000.00
Sales Returns and allowances 50,000.00
Total 2,370,000.00
Less: Accounts Receivable, beg. (300,000.00)
Notes Receivable, end (100,000.00)
15 Sales on account 1,970,000.00
Add: Cash Sales 500,000.00
12 GROSS SALES 2,470,000.00
Accounts Payable, end 120,000.00

Notes Payable end (net of P100,000.00) 100,000.00
Payments of accounts payable 1,500,000.00
Payments of notes payable 400,000.00
Purchase discounts 20,000.00
Purchase returns and allowances 60,000.00
Total 2,200,000.00
Less: Accounts payable beg (160,000.00)
Notes Payable beg (150,000.00)
14 Purchases on Account 1,890,000.00
Add: Cash Purchases 130,000.00
13 Gross Purchases 2,020,000.00
ADJUSTING ENTRY
Accounts Receivable
1 Accounts Receivable, beg. - 200,000.00
Sales 200,000.00
Retained Earnings 200,000.00
2 Accounts Receivable 250,000.00

Sales 250,000.00
Accounts Payable
3 Retained Earnings 350,000.00
Purchases 350,000.00
AccoAccounts Payable - Beg.
4 Purchases 280,000.00
Accounts Payable 280,000.00
Accounts Payable, end.
Accrued Expenses
5 Retained Earnings 70,000.00
Accrued Expenses 70,000.00
Accrued expenses, beg.
6 Expenses 100,000.00
Accrued Expense Payable 100,000.00
Merchandise Inventory
7 Inventory 150,000.00
Retained Earnings 150,000.00
Merchandise Inventory beg.
Income Summary account 210,000.00
Other Information
a Advances from Customer 40,000.00
Sales 40,000.00
Entry Made - 2021

Cash 40,000.00
Sales 40,000.00
Net Income Over
Retained earnings Over
Should be
Cash 40,000.00
Advances from Customer 40,000.00

Sale 40,000.00
b Advances to Customer 100,000.00

Entry Made
Cash 100,000.00
Should be entry
Advances to Customer 100,000.00
Cash 100,000.00
c Retained Earnings 10,000.00

Depreciation Expense 20,000.00
Accumulated Depreciation - Equipment 30,000.00
d Retained Earnings 300,000.00

e Doubtful accounts 25,000.00

Allowance for doubtful accounts 25,000.00
(250,000.00 x 10%)
f Interest Expense 36,000.00

Accrued Interest Payable 36,000.00
(900,000.00 x 12% x 4/12)
ADJUSTING ENTRY
Accounts Receivable
Income Summary account 500,000.00
2 Accounts Receivable 100,000.00

Sales 100,000.00
2.2 Purchases 80,000.00

Accounts Payable 80,000.00
3 Expenses 20,000.00
Accrued Expense Payable 20,000.00
4 Due from Officers and Employees 10,000.00

Purchases 10,000.00
5 Sales 25,000.00
6 Doubtful accounts 5,000.00

Allowance for doubtful accounts 5,000.00
7.a Office Supplies 5,000.00

Office Supplies Expense 5,000.00
7.b Equipment 100,000.00

Expenses 100,000.00

Prepaid Insurance 15,000.00

Expenses 15,000.00
(20,000.00 x 9/12)
f Interest Expense 4,000.00

Accrued Interest Payable 4,000.00
(100,000.00 x 12% x 4/12) 4,000.00

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PROBLEM 1

Dec. 31 Ending Balance 1,200.00

Beg. Balance 1,500.00

Dec. 31 Ending Balance 3,700.00

Ending Balance 3,700.00

Dec. 31 Ending Bala 12,300.00

Expenses paid 135,200.00

Prepaid Insurance - Unadjusted balance 5,000.00

Dec. 31 Ending Bala 700,000.00

Accrued salary payable beg. 400,000.00

Purchases, Cash basis 2,000,000.00

Exepenses - Cash basis 1,500,000.00

Retained Earnigns, unadjusted 600,000.00

Accounts Payable, end 120,000.00

2 Accounts Receivable 250,000.00

Entry Made - 2021

Advances from Customer 40,000.00

b Advances to Customer 100,000.00

c Retained Earnings 10,000.00

d Retained Earnings 300,000.00

e Doubtful accounts 25,000.00

f Interest Expense 36,000.00

2 Accounts Receivable 100,000.00

2.2 Purchases 80,000.00

4 Due from Officers and Employees 10,000.00

6 Doubtful accounts 5,000.00

7.a Office Supplies 5,000.00

7.b Equipment 100,000.00

Depreciation Expense 5,000.00

Prepaid Insurance 15,000.00

f Interest Expense 4,000.00

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