answer the questions, and write down the solutions. ( financial accounting )

Fall 2020

Financial Accounting I - Mid-term exam 1

Variant D

Duration: up to 75 minutes. Total points available: 100 points

ALL questions are compulsory and MUST be attempted.

Please read the following examination rules. Any failure to observe the following rules will be considered as cheating, and you will receive an F for this exam.

Student’s name

Student’s ID

Candidates may not leave the room once the examination has started. Candidates leaving the examination room will not be allowed to come back into the examination room.
THIS IS CLOSE-BOOK EXAM. The use of calculators is allowed. All other books, materials, papers, notes, magazines, journals, bags, brief cases and other materials must be placed in the designated areas.
All work must be carried out in the official answer sheets. No other paper may be used.
Candidates may not borrow anything from other candidates.
Talking to anyone other than the invigilator in the examination room is regarded as cheating.
The examination will be conducted in strict silence. Mobile phones, pagers, and clock/watch alarms must be turned off.
If you need help, please raise your hand and invigilator approaches you. Only questions on translation of unclear terms may be asked after the examination is commenced.
All other communications, in any form or looking at each other’s papers are strictly prohibited.
Any candidate continuing to work after the invigilator announces that time is up or after the “pens down” announcement will be considered to have breached the rules and committed an act of cheating.

Burda Alatau Press (the Company) is a publishing house based in Kazakhstan which is selling 28 different magazines on Kazakhstani market of which 24 are purchased directly from its immediate parent company Burda Russia based in Russian Federation. Some clients pay subscription fees in advance for the magazines, others are billed after magazines have been delivered. Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, 2015, follows. (Bear in mind that adjusting entries have already been made for the first 11 months of 2015, but not for December.)

Other Data

December 1 The Company issued 35,000 shares of capital stock in exchange for $35,000 cash.
December 2 Purchased additional printing facilities (Office equipment) for $29,000. Made a $6,000 cash down payment and issued a note payable for the remaining amount owed.
December 4 Purchased office supplies on account for 1500$
December 15 Billed customers $14,500 for the magazines sold during the first half of December.
December 15 Paid $4,500 in salaries earned by employees during the first half of December.
December 18 Paid $1040 for maintenance and repair services of the company’s office. Received a $3,900 bill from Burda Russia for advertising services provided in December. The entire amount is due January 10.
December 25 Collected $8,000 of the amounts billed to customers on December 15.
December 30 Billed customers $10,200 for the magazines sold during the second half of the month.
December 30 Paid $6,000 in salaries earned by employees during the second half of the month.
December 30 Declared a $ 3,000 dividend payable on January 15.

Burda Alatau Press
Trial Balance
December 1, 2015
Cash	69 800
Accounts receivable	4 600
Office supplies	385
Office equipment	54 000
Accounts payable	3 100
Interest payable	540
Income taxes payable	4 000
Note payable	22 000
Capital stock	55 000
Retained earnings	20 000
Dividends	2 000
Subscription fees earned (Revenues)	57 170
Office supplies expense	450
Rent expense	3 000
Insurance expense	2 300
Salaries expense	20 000
Interest expense	375
Income taxes expense	4 900

Instructions

For each of the above numbered paragraphs, prepare the necessary journal entry (no explanation required).
Analyze the effects that each of these transactions will have on the following six components of the company’s financial statements for the month of December. Organize your answer in tabular form, using the column headings shown. Use I for increase, D for decrease, and NE for no effect.

Income Statement

Balance Sheet

Transaction

date

Revenue – Expenses = Net Income

? ? ?

Assets = Liabilities + Owners’ Equity

? ? ?

Prepare a trial balance dated December 31, 2015.

Using figures from the trial balance prepared in c, prepare the Balance Sheet as at 31 December 2015 and the Income Statement for the period ended 31 December 2015. (When preparing Balance Sheet update your Retained Earnings for Dividends, Revenues and Expenses.)