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Accounting Practice Problems and Solutions

This document contains 5 practice problems for a financial accounting course. Problem 1 provides an unadjusted trial balance for Watson Answering Service and asks the student to prepare a worksheet, classified balance sheet, and closing entries. Problem 2 describes accounting errors made by J'Morcus Webb Company and asks the student to correct the errors by reversing entries or without reversing. Problem 3 similarly describes errors made by an inexperienced accountant at Williams Company and asks for correcting entries. Problem 4 lists common balance sheet classifications and asks the student to classify various accounts from E. Williams Company's balance sheet.

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Krishna Jade Cacdac
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142 views3 pages

Accounting Practice Problems and Solutions

This document contains 5 practice problems for a financial accounting course. Problem 1 provides an unadjusted trial balance for Watson Answering Service and asks the student to prepare a worksheet, classified balance sheet, and closing entries. Problem 2 describes accounting errors made by J'Morcus Webb Company and asks the student to correct the errors by reversing entries or without reversing. Problem 3 similarly describes errors made by an inexperienced accountant at Williams Company and asks for correcting entries. Problem 4 lists common balance sheet classifications and asks the student to classify various accounts from E. Williams Company's balance sheet.

Uploaded by

Krishna Jade Cacdac
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Ateneo de Zamboanga University

School of Management and Accountancy


FINANCIAL ACCOUNTING I
Practise Problem/Assignment

Name __________________________________________________________________ Score/Rating ______


At the end of its first month of operations, Watson Answering Service has the following unadjusted
trial balance.

WATSON ANSWERING SERVICE


August 31, 2012
Trial Balance

Debit Credit
Cash $ 5,400
Accounts Receivable 2,800
Supplies 1,300
Prepaid Insurance 2,400
Equipment 60,000
Notes Payable $40,000
Accounts Payable 2,400
Owner’s Capital 30,000
Owner’s Drawings 1,000
Service Revenue 4,900
Salaries and Wages Expense 3,200
Utilities Expense 800
Advertising Expense 400
$77,300 $77,300

Other data:
1. Insurance expires at the rate of $200 per month.
2. $1,000 of supplies are on hand at August 31.
3. Monthly depreciation on the equipment is $900.
4. Interest of $500 on the notes payable has accrued during August.

Instructions:
(a) Prepare a worksheet.
(b) Prepare a classified balance sheet assuming $35,000 of the notes payable are long-term.
(c) Journalize the closing entries.
Case 3.
J’Morcus Webb Company discovered the following errors made in January 2020.
1. A payment of Salaries and Wages Expense of $700 was debited to Equipment and credited to
Cash, both for $700.
2. A collection of $1,000 from a client on account was debited to Cash $100 and credited to Service
Revenue $100.
3. The purchase of equipment on account for $760 was debited to Equipment $670 and credited to
Accounts Payable $670.
Instructions:
(a) Correct the errors by reversing the incorrect entry and preparing the correct entry.
(b) Correct the errors without reversing the incorrect entry.
Case 4.
Williams Company has an inexperienced accountant. During the first 2 weeks on the job, the
accountant made the following errors in journalizing transactions. All entries were posted as made.
1. A payment on account of $840 to a creditor was debited to Accounts Payable $480 and credited
to Cash $480.
2. The purchase of supplies on account for $560 was debited to Equipment $56 and credited to
Accounts Payable $56.
3. A $500 withdrawal of cash for C. Williams’ personal use was debited to Salaries and Wages
Expense $500 and credited to Cash $500.
Instructions:
Prepare the correcting entries.

Case 5.
The following are the major balance sheet classifications.
Current assets (CA) Current liabilities (CL)
Long-term investments (LTI) Long-term liabilities (LTL)
Property, plant, and equipment (PPE) Owner’s equity (OE)
Intangible assets (IA)

Instructions:
Classify each of the following accounts taken from E. Williams Company’s balance sheet.
______ Accounts payable ______ Accumulated depreciation
______ Accounts receivable ______ Buildings
______ Cash ______ Land
______ Owner’s capital ______ Long-term debt
______ Patents ______ Supplies
______ Salaries and wages payable ______ Equipment
______ Inventory ______ Prepaid expenses
______ Investments

***END***

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