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ACC/291T
PRINCIPLES OFACCOUNTING II
The Latest Version A+ Study Guide
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ACC 291T Wk 1 - Practice: ConnectKnowledgeCheck (New)
Prepare journal entries to record each of the following transactions. The
company records purchases using the gross method and a perpetual
inventory system.
Aug. 1 Purchased merchandise with an invoice price of $78,000 and credit terms of 2/10, n/30.
Aug. 11 Paid supplier the amount owed from the August 1 purchase.
Required information
[The following information applies to the questions displayed below.]
Allied Merchandisers was organized on May 1. Macy Co. is a major
customer (buyer) of Allied (seller) products.
May 3 Allied made its first and only purchase of inventory for the period on May 3 for 2,000
units at a price of $10 cash per unit (for a total cost of $20,000).
5 Allied sold 1,000 of the units in inventory for $14 per unit (invoice total: $14,000) to
Macy Co. under credit terms 2/10, n/60. The goods cost Allied $10,000.
7 Macy returns 100 units because they did not fit the customer’s needs (invoice amount:
$1,400). Allied restores the units, which cost $1,000, to its inventory.
8 Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the

units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable
for $600 to compensate for the damage.
15 Allied receives payment from Macy for the amount owed on the May 5 purchase;
payment is net of returns, allowances, and any cash discount.
Prepare the appropriate journal entries for Macy Co. to record each of the
May transactions. Macy is a retailer that uses the gross method and a
perpetual inventory system, and purchases these units for resale. (If no entry
is required for a transaction/event, select "No journal entry required" in the
first account field.)
Prepare journal entries to record the following transactions for a retail store.
The company uses a perpetual inventory system and the gross method.
Apr. 2 Purchased $5,500 of merchandise from Lyon Company with credit terms of 2/15, n/60,
invoice dated April 2, and FOB shipping point.
3 Paid $200 cash for shipping charges on theApril 2 purchase.
4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $800.
17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the
returned merchandise.
18 Purchased $10,300 of merchandise from Frist Corp. with credit terms of 1/10, n/30,
invoice dated April 18, and FOB destination.
21 After negotiations, received from Frist a $500 allowance toward the $10,300 owed on the
April 18 purchase.
28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the
discount.
Prepare journal entries to record each of the following transactions. The
company records purchases using the gross method and a perpetual
inventory system.
Sept. 15 Purchased merchandise with an invoice price of $75,000 and credit terms of
2/5, n/15.
Sept. 29 Paid supplier the amount owed on the September 15 purchase.
Prepare journal entries to record each of the following transactions of a
merchandising company. The company uses a perpetual inventory system
and the gross method.

Nov. 5 Purchased 500 units of product at a cost of $20 per unit. Terms of the sale are 3/10, n/60;
the invoice is dated November 5.
Nov. 7 Returned 45 defective units from the November 5 purchase and received full credit.
Nov. 15 Paid the amount due from the November 5 purchase, minus the return on November 7.
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ACC 291T Wk 1 - Apply: ConnectHomework (New)
Exercise 5-1 Computing revenues, expenses, and income LO C1, C2
Fill in the blanks in the following separate income
statements a through e. (Amounts to be deducted should be indicated by a
minus sign.)
Exercise 5-1 Computing revenues, expenses, and income LO C1, C2
Fill in the blanks in the following separate income
statements a through e. (Amounts to be deducted should be indicated by a
minus sign.)
Exercise 5-3 Recording purchases, purchases returns, and purchases
allowances LO P1
18 Purchased $8,500 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice
dated April 18, and FOB destination.

April 18 purchase.
28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the
discount.
allowances LO P1
18 Purchased $8,100 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice
dated April 18, and FOB destination.
April 18 purchase.
Use the following information for the Exercises below.

allowances LO P1
allowances LO P1

Prepare journal entries to record each of the following sales transactions of a
Apr. 1 Sold merchandise for $4,200, with credit terms n/30; invoice dated April 1. The cost of the
merchandise is $2,520.
Apr. 4 The customer in the April 1 sale returned $500 of merchandise for full credit. The
merchandise, which had cost $300, is returned to inventory.
Apr. 8 Sold merchandise for $1,600, with credit terms of 1/10, n/30; invoice dated April 8. Cost
of the merchandise is $1,120.
Apr. 11 Received payment for the amount due from the April 1 sale less the return onApril 4.
It's highly recommended that you use your
first attempt as a study attempt, if needed.
True or False

Prepare journal entries to record the following transactions for Allied
assuming it uses a perpetual inventory system and the gross method.
A company reports the following sales-related information.
Sales, gross $225,000 Sales returns and allowances $16,000
Sales discounts 4,500 Sales salaries expense 10,500
Prepare the net sales portion only of this company’s multiple-step income
statement.
Study Attempt
It's highly recommended that you use your
first attempt as a study attempt, if needed.
True or False

QS 5-4 Computing net invoice amounts LO P1
Compute the amount to be paid for each of the four separate invoices
assuming that all invoices are paid within the discount period.
QS 5-8 Recording sales, returns, and discounts taken LO P2
Apr. 1 Sold merchandise for $3,000, with credit terms n/30; invoice dated April 1. The cost of the
of the merchandise is $700.
QS 5-8 Recording sales, returns, and discounts taken LO P2
Apr. 1 Sold merchandise for $3,600, with credit terms n/30; invoice dated April 1. The cost of the
of the merchandise is $910.

Exercise 5-4 Recording sales, sales returns, and sales allowances LO
P2

Exercise 5-4 Recording sales, sales returns, and sales allowances LO
P2
Exercise 5-11 Net sales computation for multiple-step income
statement LO P4
Sales, gross $ 200,000 Sales returns and allowances $ 16,000
statement.
Exercise 5-11 Net sales computation for multiple-step income
statement LO P4
statement.

a. Depreciation on the company's equipment for the year is computed to
be $12,000.
b. The Prepaid Insurance account had a $8,000 debit balance at
December 31 before adjusting for the costs of any expired coverage.
An analysis of the company’s insurance policies showed that $1,510
of unexpired insurance coverage remains.
c. The Office Supplies account had a $220 debit balance at the
beginning of December; and $2,680 of office supplies were purchased
in December. The December 31 physical count showed $260 of
supplies available.
d. One-fourth of the work related to $11,000 of cash received in advance
was performed this period.
e. The Prepaid Rent account had a $5,200 debit balance at December 31
before adjusting for the costs of any expired coverage. An analysis of
rental policies showed that $3,690 of rental coverage had expired.
f. Wage expenses of $3,000 have been incurred but are not paid as of
December 31.
Prepare adjusting journal entries for the year ended (date of) December 31
for each of these separate situations.
a. Wages of $6,000 are earned by workers but not paid as of December
31.
b. Depreciation on the company’s equipment for the year is $11,200.
c. The Office Supplies account had a $310 debit balance at the
beginning of December. During December, $5,984 of office supplies
are purchased. A physical count of supplies at December 31 shows
$648 of supplies available.
d. The Prepaid Insurance account had a $5,000 balance at the beginning
of December. An analysis of insurance policies shows that $3,400 of
unexpired insurance benefits remain at December 31.
e. The company has earned (but not recorded) $500 of interest revenue
for the year ended December 31. The interest payment will be
received on 10 days after the year-end January 10.
f. The company has a bank loan and has incurred (but not recorded)
interest expense of $4,000 for the year ended December 31. The
company will pay the interest five days after the year-end on January
5.
For each of the above separate cases, prepare adjusting entries required of

financial statements for the year ended (date of) December 31.
Nix’It Company’s ledger on July 31, its fiscal year-end, includes the
following selected accounts that have normal balances (Nix’It uses the
perpetual inventory system).
Merchandise inventory $ 40,800 Sales returns and allowances $ 5,900
T. Nix, Capital 121,300 Cost of goods sold 106,800
T. Nix, Withdrawals 7,000 Depreciation expense 10,900
Sales 159,000 Salaries expense 35,500
Sales discounts 3,500 Miscellaneous expenses 5,000
A physical count of its July 31 year-end inventory discloses that the cost of
the merchandise inventory still available is $39,350.
Prepare the entry to record any inventory shrinkage.
QS 3-2 Computing accrual and cash income LO C1
In its first year of operations, Roma Company reports the following.
 Earned revenues of $54,000 ($46,000 cash received from customers).
 Incurred expenses of $30,000 ($23,400 cash paid toward them).
 Prepaid $9,000 cash for costs that will not be expensed until next
year.
Compute the company’s first-year net income under both the cash
basis and the accrual basis of accounting.

QS 3-5 Prepaid (deferred) expenses adjustments LO P1
For each separate case below, follow the three-step process for adjusting the
prepaid asset account at December 31.
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal.
Step 3: Record the December 31 adjusting entry to get from step 1 to step 2.
Assume no other adjusting entries are made during the year.
QS 3-8Accumulated depreciation adjustments LO P1
For each separate case below, follow the three-step process for adjusting the
Accumulated Depreciation account at December 31.
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal.
Step 3: Record the December 31 adjusting entry to get from step 1 to step 2.
QS 3-10 Unearned (deferred) revenues adjustments LO P2
Record adjusting journal entries for each of the following for year ended
December 31.
a. Unearned Rent Revenue. The Krug Company collected $12,600 rent
in advance on November 1, debiting Cash and crediting Unearned
Rent Revenue. The tenant was paying 12 months’ rent in advance and
occupancy began November 1.
b. Unearned Services Revenue. The company charges $130 per insect
treatment. A customer paid $520 on October 1 in advance for four
treatments, which was recorded with a debit to Cash and a credit to

Unearned Services Revenue. At year-end, the company has applied
three treatments for the customer.
c. Unearned Rent Revenue. On September 1, a client paid the company
$37,200 cash for six months of rent in advance (the client leased a
building and took occupancy immediately). The company recorded
the cash as Unearned Rent Revenue.
QS 3-14Accrued revenues adjustments LO P4
Record adjusting journal entries for each of the following for year ended
December 31.
a. Accounts Receivable. At year-end, the L. Cole Company has
completed services of $23,000 for a client, but the client has not yet
been billed for those services.
b. Interest Receivable. At year-end, the company has earned, but not yet
recorded, $550 of interest earned from its investments in government
bonds.
c. Accounts Receivable. A painting company collects fees when jobs are
complete. The work for one customer, whose job was bid at $1,620,
has been completed, but the customer has not yet been billed.
Use the following information for the Quick Study below.

QS 5-9Accounting for shrinkage-perpetual system LO P3
The following list includes selected permanent accounts and all of the
temporary accounts from the December 31 unadjusted trial balance of
Emiko Co., a business owned by Kumi Emiko. Emiko Co. uses a perpetual
inventory system.
Debit Credit
Merchandise inventory $ 36,500
Prepaid selling expenses 6,900
K. Emiko, Withdrawals 46,000
Sales $ 581,000
Sales returns and allowances 20,100
Sales discounts 6,300
Cost of goods sold 238,000
Sales salaries expense 61,000
Utilities expense 21,500
Selling expenses 42,500
Administrative expenses 118,000
Additional Information
Accrued and unpaid sales salaries amount to $2,500. Prepaid selling
expenses of $2,200 have expired. A physical count of year-end merchandise
inventory is taken to determine shrinkage and shows $32,600 of goods still

available.
(a) Use the above account balances along with the additional information,
prepare the adjusting entries.
(b) Use the above account balances along with the additional information,
prepare the closing entries.
statement.
Clear Water Co. reports the following balance sheet accounts as of
December 31.
Buildings $47,500
Accounts receivable 2,900
Land 20,000
Merchandise inventory 8,800
Accounts payable 5,900
Cash 9,800
Notes payable (due in 7 years) 48,000
Office supplies 2,800
O.Water, Capital 34,000
Wages payable 3,900
Required:
Prepare a classified balance sheet.
Save-the-Earth Co. reports the following income statement accounts for the
year ended December 31.
Sales discounts $ 870

Office salaries expense 3,200
Rent expense—Office space 2,700
Advertising expense 740
Sales returns and allowances 370
Office supplies expense 740
Sales 44,000
Insurance expense 2,200
Sales staff salaries 3,700
Required:
Prepare a multiple-step income statement for the year ended December 31.

Prepare journal entries to close the balances in temporary revenue and
expense accounts. Remember to consider the entry for shrinkage from QS
5-9. (The solution from QS 5-9 is required to complete this question.)
Fit-for-Life Foods reports the following income statement accounts for
the year ended December 31.
Gain on sale of equipment $ 6,350 Depreciation expense—Office copier
Office supplies expense 770 Sales discounts
Insurance expense 1,240 Sales returns and allowances
Sales 215,000 TV advertising expense
Office salaries expense 31,500 Interest revenue
Rent expense—Selling space 11,000 Cost of goods sold
Sales staff wages 23,000 Sales commission expense
Prepare a multiple-step income statement.

QS 5-9 Accounting for shrinkage-perpetual system LO P3

QS 5-10 Closing entries LO P3
Prepare journal entries to close the balances in temporary revenue and
expense accounts. Remember to consider the entry for shrinkage from QS
5-9. (The solution from QS 5-9 is required to complete this question.)
Exercise 5-10 Preparing adjusting and closing entries for a
merchandiser LO P3
The following list includes selected permanent accounts and all of the
temporary accounts from the December 31 unadjusted trial balance of
Emiko Co., a business owned by Kumi Emiko. Emiko Co. uses a perpetual
inventory system.
Debit Credit
Merchandise inventory $ 35,500
Prepaid selling expenses 6,700
K. Emiko, Withdrawals 44,000
Sales $ 573,000
Sales returns and allowances 19,700
Sales discounts 6,100
Sales salaries expense 59,000
Utilities expense 20,500
Selling expenses 41,500
Administrative expenses 116,000
Additional Information
Accrued and unpaid sales salaries amount to $2,300. Prepaid selling
expenses of $2,000 have expired. A physical count of year-end merchandise
inventory is taken to determine shrinkage and shows $32,000 of goods still
available.
(a) Use the above account balances along with the additional information,
prepare the adjusting entries.
(b) Use the above account balances along with the additional information,

prepare the closing entries.
QS 5-12 Preparing a multi-step income statement LO P4
Save-the-Earth Co. reports the following income statement accounts for the
Sales discounts $ 780
Office salaries expense 2,300
Rent expense—Office space 1,800
Advertising expense 560
Sales returns and allowances 280
Office supplies expense 560
Sales 26,000
Insurance expense 1,300
Sales staff salaries 2,800
Required:
Prepare a multiple-step income statement for the year ended December 31.
QS 5-13 Preparing a classified balance sheet for a
merchandiser LO P4
Clear Water Co. reports the following balance sheet accounts as of
December 31.
Buildings $ 65,000
Accounts receivable 3,600
Land 27,000
Merchandise inventory 10,200
Accounts payable 6,600

Cash 11,200
Notes payable (due in 7 years) 62,000
Office supplies 4,200
O.Water, Capital 48,000
Wages payable 4,600
Required:
Prepare a classified balance sheet.
Exercise 5-11 Net sales computation for multiple-step
income statement LO P4
statement.
Exercise 5-15 Preparing a multi-step income statement LO
P4
Fit-for-Life Foods reports the following income statement accounts for the
Gain on sale of equipment $ 6,160 Depreciation expense—Office copier
Office supplies expense 720 Sales discounts
Insurance expense 1,250 Sales returns and allowances
Sales 224,000 TV advertising expense
Office salaries expense 31,400 Interest revenue

Rent expense—Selling space 10,800 Cost of goods sold
Sales staff wages 22,200 Sales commission expense
Prepare a multiple-step income statement.
ACC 291T Wk 5 - PracticeConnectKnowledgeCheck(New)
Waupaca Company establishes a $500 petty cash fund on September 9. On
September 30, the fund shows $247 in cash along with receipts for the
following expenditures: transportation-in, $55; postage expenses, $61; and
miscellaneous expenses, $130. The petty cashier could not account for a $7
shortage in the fund. The company uses the perpetual system in accounting
for merchandise inventory.
Prepare (1) the September 9 entry to establish the fund, (2) the September
30 entry to reimburse the fund, and (3) an October 1 entry to increase the
fund to $570.
Del Gato Clinic's cash account shows a $15,058 debit balance and its bank
statement shows $14,049 on deposit at the close of business on June 30.
a. Outstanding checks as of June 30 total $1,237.
b. The June 30 bank statement lists a $40 bank service charge.

c. Check No. 919, listed with the canceled checks, was correctly drawn
for $389 in payment of a utility bill on June 15. Del Gato Clinic
mistakenly recorded it with a debit to Utilities Expense and a credit to
Cash in the amount of $398.
d. The June 30 cash receipts of $2,215 were placed in the bank’s night
depository after banking hours and were not recorded on the June 30
bank statement.
Prepare the adjusting journal entries that Del Gato Clinic must record as a
result of preparing the bank reconciliation. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account
field.)
Wright Company's cash account shows a $28,700 debit balance and its bank
statement shows $27,000 on deposit at the close of business on May 31.
a. The May 31 bank statement lists $160 in bank service charges; the
company has not yet recorded the cost of these services.
b. Outstanding checks as of May 31 total $6,200.
c. May 31 cash receipts of $6,800 were placed in the bank’s night
depository after banking hours and were not recorded on the May 31
bank statement.
d. In reviewing the bank statement, a $460 check written by Smith
Company was mistakenly drawn against Wright’s account.
e. The bank statement shows a $480 NSF check from a customer; the
company has not yet recorded this NSF check.
Prepare its bank reconciliation using the above information.
Nolan Company's cash account shows a $28,500 debit balance and its bank
b. The June 30 bank statement lists $25 in bank service charges; the
c. In reviewing the bank statement, a $80 check written by the company
was mistakenly recorded in the company’s books as $89.
d. June 30 cash receipts of $3,026 were placed in the bank’s night
bank statement.
e. The bank statement included a $32 credit for interest earned on the
company’s cash in the bank. The company has not yet recorded
interest earned.

Prepare a bank reconciliation using the above information.
1. Brooks Agency set up a petty cash fund for $270. At the end of the current period,
the fund contained $192 and had the following receipts: entertainment, $33; postage,
$21; and printing, $24.
Prepare journal entries to record (a) establishment of the fund and (b) reimbursement
of the fund at the end of the current period.
2. Identify the two events from the following that cause a Petty Cash account to be credited in a
journal entry. (Single click the box with the question mark to produce a check mark for a correct
answer and double click the box with the question mark to empty the box for a wrong answer.)
 Fund amount is being reduced.checkedCorrect
 Fund amount is being increased.uncheckedCorrect
 Fund is being eliminated.checkedCorrect
 Fund is being established.uncheckedCorrect
ACC 291T Wk 5 - Apply: ConnectHomework(New)
QS 8-6 Petty cash accounting LO P2
1. Brooks Agency set up a petty cash fund for $250. At the end of the
current period, the fund contained $177 and had the following receipts:
entertainment, $32; postage, $22; and printing, $19.
Prepare journal entries to record (a) establishment of the fund and (b)
reimbursement of the fund at the end of the current period.
2. Identify the two events from the following that cause a Petty Cash
account to be credited in a journal entry. (Single click the box with the
question mark to produce a check mark for a correct answer and double
click the box with the question mark to empty the box for a wrong answer.)

 Fund amount is being reduced.checkedCorrect
 Fund amount is being increased.uncheckedCorrect
 Fund is being eliminated.checkedCorrect
 Fund is being established.uncheckedCorrect
Exercise 8-8 Petty cash fund with a shortage LO P2
Waupaca Company establishes a $480 petty cash fund on September 9. On
September 30, the fund shows $217 in cash along with receipts for the
following expenditures: transportation-in, $60; postage expenses, $69; and
miscellaneous expenses, $125. The petty cashier could not account for a $9
shortage in the fund. The company uses the perpetual system in accounting
for merchandise inventory.
Prepare (1) the September 9 entry to establish the fund, (2) the September
30 entry to reimburse the fund, and (3) an October 1 entry to increase the
fund to $540.
Exercise 8-10 Petty cash fund accounting LO P2
Palmona Co. establishes a $190 petty cash fund on January 1. On January 8,
the fund shows $101 in cash along with receipts for the following
expenditures: postage, $36; transportation-in, $13; delivery expenses, $15;
and miscellaneous expenses, $25. Palmona uses the perpetual system in
accounting for merchandise inventory.
Prepare journal entries to (1) establish the fund on January 1, (2) reimburse
it on January 8, and (3) both reimburse the fund and increase it to $240 on
January 8, assuming no entry in part 2. Hint: Make two separate entries for
part 3.

QS 8-8 Bank reconciliation LO P3
Nolan Company's cash account shows a $29,193 debit balance and its bank
b. The June 30 bank statement lists $32 in bank service charges; the
c. In reviewing the bank statement, a $80 check written by the company
was mistakenly recorded in the company’s books as $89.
d. June 30 cash receipts of $3,853 were placed in the bank’s night
bank statement.
e. The bank statement included a $34 credit for interest earned on the
company’s cash in the bank. The company has not yet recorded
interest earned.
QS 8-9 Bank reconciliation LO P3
Organic Food Co.'s cash account shows a $5,800 debit balance and its bank
statement shows $5,370 on deposit at the close of business on August 31.
a. August 31 cash receipts of $1,540 were placed in the bank’s night
depository after banking hours and were not recorded on the August
31 bank statement.
b. The bank statement shows a $150 NSF check from a customer; the
c. Outstanding checks as of August 31 total $1,420.
d. In reviewing the bank statement, an $110 check written by Organic
Fruits was mistakenly drawn against Organic Food’s account.
e. The August 31 bank statement lists $50 in bank service charges; the

Del Gato Clinic's cash account shows a $14,152 debit balance and its bank
b. The June 30 bank statement lists a $80 bank service charge.
c. Check No. 919, listed with the canceled checks, was correctly drawn
for $489 in payment of a utility bill on June 15. Del Gato Clinic
mistakenly recorded it with a debit to Utilities Expense and a credit to
Cash in the amount of $498.
d. The June 30 cash receipts of $2,249 were placed in the bank’s night
bank statement.
Exercise 8-12 Bank reconciliation LO P3
Exercise 8-13 Adjusting entries from bank reconciliation LO
P3
Prepare the adjusting journal entries that Del Gato Clinic must record as a
result of preparing the bank reconciliation. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account
field.)

Exercise 8-14 Bank reconciliation LO P3
Wright Company's cash account shows a $29,100 debit balance and its bank
statement shows $27,400 on deposit at the close of business on May 31.
a. The May 31 bank statement lists $180 in bank service charges; the
b. Outstanding checks as of May 31 total $6,400.
c. May 31 cash receipts of $7,000 were placed in the bank’s night
depository after banking hours and were not recorded on the May 31
bank statement.
d. In reviewing the bank statement, a $480 check written by Smith
Company was mistakenly drawn against Wright’s account.
e. The bank statement shows a $440 NSF check from a customer; the

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