Caution: This is only a practice exam.

You are responsible for all topics, exercises

and problems assigned and/or solved in CH1 and CH2.

ACCT 2001
Practice Exam 1
Fall 2015
Question 1: Journal Entries, T-Accounts, and Financial Statements
Maria Sanchez began business as Sanchez Law Firm on November 1, 20X6 as
corporation.
Required:
(1) Record the Journal entries for the following November transactions
(2) Post the entries to the respective T-Accounts
(3) Calculate the ending balance of each T-Account (Note: Make sure to place the balance
in the correct side of the account)
(4) Prepare the Income Statement, Statement of Changes in Equity, and the Balance Sheet
a) Sanchez invested $15,000 cash and a law library valued at $6,000 in exchange for
common stock.
b) Purchased $7,500 of office equipment from Johnson Bros. on credit.
c) Completed legal work for a client and received $1,500 cash in full payment.
d) Paid Johnson Bros. $3,500 cash in partial settlement of the amount owed from
transaction (b)
e) Completed $4,000 of legal work for a client on credit.
f) Paid a $2,000 cash dividend.
g) Received $2,500 cash as partial payment for the legal work completed for the client in
(e).
h) Paid $2,500 cash for the legal secretary's salary.
Transaction
A.

Accounts

B.

C.

D.

E.

F.

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DR

CR

Caution: This is only a practice exam. You are responsible for all topics, exercises
and problems assigned and/or solved in CH1 and CH2.
Transaction
G.

Accounts

DR

H.

Cash

Office Equipment

Dividends

Accounts Receivable

Accounts Payable

Legal Fees Earned

Law Library

Common Stock

Salaries Expense

(1) Income Statement

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CR

Caution: This is only a practice exam. You are responsible for all topics, exercises
and problems assigned and/or solved in CH1 and CH2.

(2) Statement of Changes in Equity

(3) Balance Sheet

Page 3 of 5

Caution: This is only a practice exam. You are responsible for all topics, exercises
and problems assigned and/or solved in CH1 and CH2.

Question 2: Transaction Analysis

Analyze the following transactions by indicating its effects on Total Assets , Total
Liabilities and Total Equity by an Increase (INC), Decrease (DEC), or No Effect (NE)
#
1
2
3
4
5
6
7
8
9
10

Description

Total
Assets

Total
Liabilities

Received cash for services rendered

Purchased office equipment on credit
Paid salaries to employees
Collected cash from a credit customer
Paid telephone bill for the month
Paid for the office equipment purchased in transaction 2 above
Purchased office supplies on credit
Paid cash dividends to shareholders
Obtained a loan from the bank
Billed customers for services rendered

Question 3: Preparation of the Trial Balance

The ledger account balances for Holmes Company are listed below in alphabetical order
Accounts Payable
Accounts
Receivable
Cash
Common Stock
Dividends
Repair Revenue
Salaries Expense
Unearned Revenue
Utilities Expense

5,000
7,000
30,000
11,000
4,000
60,000
25,000
2,000
12,000

Instructions: Prepare the Trial Balance for Holmes Company as of Dec. 31, 20X5
(First year of operations)

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Total
Equity

Caution: This is only a practice exam. You are responsible for all topics, exercises
and problems assigned and/or solved in CH1 and CH2.

Question 4: Calculation of Net Income

During 2016 Power Companys assets increased by $10,000 while Liabilities decreased
by $40,000. During the year owners invested $20,000 and the company declared and paid
dividends of $5,000. Calculate the Net Income for 2016.

Question 5: Types of Accounts: DR and CR

For each account below indicate its type, how it is increased /decreased and its normal
balance.
Account
Type
Increased by
Decreased by
Normal Balance
Cash
Notes Payable
Unearned
Revenue
Interest expense
Revenue

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