1. On February 1st, Sparrock Management borrowed cash of $3,500,000 from the bank for 10 years, at 6.5% interest paid semi-annually. Record the entry to receive the loan and the semi-annual interest amount for the month of August.

2. Cunningham LLC borrowed cash of $875,000 from the bank for 7.5 years, at 4% interest paid annually. Record the entry to receive the loan and the semi-annual interest

amount.

3. Moore Company sold products totaling $1,500,000 to customers. Throughout the year, Moore received 85% of the revenue for the products sold. At the end of the year, Moore estimated that 10% of the remaining A/R balance would not be collectible. Record the

entry to record the revenue transaction and the entry to record the bad debt expense using the allowance method.

4. Coleman LLC purchased land and a building for a total of $2,000,000 on January 1, 2019. The land had a value of $350,000. It estimates that the building will have a salvage value of $110,000 and has a useful life of 35 years. The company's accounting year ends on December 31 of each year. What is the calculation to record depreciation expense?

Record the entry for the purchase and the annual depreciation Expense using the straight-line method of depreciation.

5. If an asset has a useful life of 10 years, what is the annual straight-line depreciation rate?
   1. 5%

b. 10%

c. 25%

d. 6%

6. If the annual depreciation expense using the straight-line method is $50,000 and the

asset has a cost of $410,000 and a useful life of 8 years, what is the salvage value of the asset?

a. $5,000

b. $150,000

c. $50,000

d. $10,000

7. List the main difference between a balance sheet and an income statement.

Ans. The balance sheet and income statement are both important financial statements that detail the financial accounting of a company. The balance sheet details a company's assets and liabilities at a certain period of time, while the income statement details income and expenses over a period of time.

The main difference between a balance sheet and an income statement are:

Balance sheet	Income statement
A balance sheet is a financial statement that reports a company's assets, liabilities and shareholders' equity at a specific point in time and provides a basis for computing rates of return and evaluating its financial structure.	The Income Statement is one of a companys core financial statements that shows their P/L over a period of time.
A balance sheet is comprised of three items, assets, liabilities and owners equity.	An income statement is comprised of a business's income and expenses over a period of time.
A company's assets must equal liabilities and owners equity.	The income statement is often referred to as the profit and loss statement (P&L).
A balance sheet is used to determine a company's current financial situation, in order to make important financial decisions.	An income statement can be run at any time during the fiscal year to determine profitability.

8. Fill in the blanks to complete the following table:

Account	Debit	Credit
Liability	Decrease	Increase
Assets	Increase	Decrease
Expense	Increase	Decrease
Income	Decrease	Increase
Equity	Decrease	Increase

9. John Stark started his own trucking company on May 1st. He invested $400,000 to start the company, purchased $50,000 in supplies, $25,000 in inventory, paid $400 for

prepaid insurance for 6 months, $250 in advertising expenses, provided services for the month of May for $85,000, paid salaries for the month of May for $38,000 and paid

utilities expenses of $290. Record each transaction entry. How much cash did John have at the end of the month?

10. Which of the following statements is false? There may be more than one answer.
    1. When you purchase equipment, you increase an asset account.
    2. When a loan payable is paid, you decrease a liability account.
    3. When you pay salaries/wages owed to an employee, you increase a liability account.
    4. When you invest money into a business, the decrease an asset account.

11. Johnnys Car Repair Shop started the year with total assets of $960,000 and total liabilities of $640,000. During the year the business recorded $420,000 in car repair

revenues, $155,000 in expenses and purchased assets of $30,000, 50% was paid in cash and 50% was on credit. Prepare the balance sheet and income statement. Calculate the equity and net income reported by Johnnys Car Repair Shop at the end of the year.

12. What is the difference between a current(short-term) asset and a non-current (long- term asset)? Also, list three examples of each.

Current (short term) asset	Non-current (long term asset)
All the asset that represent the value of all assets that can reasonably expect to be converted into cash within one year.	Non-current asset is a companys long-term investment where the full value will not be realized within the accounting year.
Current asset can be converted to cash easily.	Noncurrent assets cannot be converted to cash easily.
Examples are: Prepaid expense, Inventory, cash equivalents, account receivable etc.	Examples are: Land, trademarks, goodwill, trademarks etc.

13. Rachels Beauty Salon started the year with total assets of $680,000 and total liabilities of $320,000. During the year the business recorded $186,000 in revenue/sales of which 65% was received in cash and the remaining on credit, paid $95,000 in expenses,

purchased assets of $18,000 and incurred liabilities of $25,000. The equity AND net income reported by Annas Hair Salon for the year was:

1. $521,000 in Equity and $45,000 in net income.
2. $426,000 in Equity and $66,000 in net income.
3. $521,000 in Equity and $66,000 in net income.
4. $216,000 in Liabilities and $41,000 in net income.

14. In June 2019, Telecom LLC sold computers to a customer totaling $130,000, receiving

65% in cash and the rest on credit. The customer made an additional payment of $8,000 in October 2019. At the end of the year, the customer went bankrupt and Telecom was notified that the customer could no longer pay the remaining balance. Record the initial entry for the sale, the second payment and the entry to write off the remaining

receivable balance using the direct write-off method.

15. Peter Johnson started a barber shop business. He began operations on August 1st and completed the following transactions, which included his initial investment of $37,000 cash. After these transactions, the ledger included the following accounts:

Cash $ 18,625

Office Supplies 6,500

Equipment 53,000

Accounts Payable 3,500

Notes Payable 6,000

Revenue 76,200

Expenses 11,780

Required: Prepare a balance sheet and income statement for this business at the end of August.

Balance sheet

Asset

Cash $18625

Office supplies $6500

Equipment $ 53000

Total asset=$ 78125

Liability

Account payable $3500

Notes Payable $6000

Total liabilities= $9500

Equity= $68625

Income statement

Revenue = $76200

Expense =$11780

Net income = $64420