Accounts classification and journalizing Exercises PDF

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practice how to prepare general journals and t accounts showing the effect of transactions on accounts and Post the accounts used in the general journal using the T-account form of the general ledger...

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Section A Exercise 1 Mr. Sam decided to open a new consulting company. During the month of May, the following transactions occurred: May 2: Mr. Sam started with $80,000 in the bank account. 6: Purchased equipment worth $25,000 on credit. 10: Performed services on credit totaling $10,000. 14: Take long term loan for a land $70,000. 19: Received a cheque of $5,000 from a client in payment on credit. 24: Paid $11,000 due to suppliers. 30: Paid $4,000 rent for the current month. Required: Prepare a schedule of transactions showing the effect of each of the above transactions on the mentioned accounts and then totaling each account.

Exercise 2 Adam opened a new company. During the month of July, the following transactions occurred: July 1: Ahmad started with $500,000 in the bank account. 5: Purchased Building worth $200,000 Cash. 10: Purchased Equipment for $50,000 on account 15: Performed services for $30,000 on account. 18: Received a payment of $5,000 from a client. 25: Paid $20,000 from the amount due in purchasing of Equipment. 30: Paid $4,000 Salaries for the current month. Required: Prepare a schedule of transactions showing the effect of each of the above transactions on accounts

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Section B – Recording Process Exercise 1 McKay Disc Golf Course was opened on March 1 by Evan McKay. The following selected events and transactions occurred during March. Mar. 1 Invested $20,000 cash in the business in exchange of common stock. 3 Purchased Sable’s Golf Land for $15,000 cash. The price consists of land $12,000, shed $2,000, and equipment $1,000. (Make one compound entry.) 5 Paid advertising expenses of $700. 6 Paid cash $600 for a one-year insurance policy. 10 Purchased golf discs and other equipment for $1,050 from Taylor Company payable in 30 days. 18 Received $1,100 in cash for golf fees (McKay records golf fees as service revenue). 19 Received $5,000 cash from customers for services expected to be completed by the end of the current quarter 25 Paid cash dividends of $3,000 to stockholders. 30 Paid salaries of $250. 30 Paid Taylor Company in full. 31 Received $2,100 cash for golf fees. Required: Journalize the March transactions.

Exercise 2 Use the general journal prepared in exercise 1 to post the “Cash” and the “Accounts Payable” to the ledger using the T-account and the three-column form.

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Exercise 3 The accounts in the ledger of Leaf Co. as of December 31, 2014, are listed in alphabetical order as follows. All accounts have normal balances. Accounts Payable

$23,500

Accounts Receivable

Notes Payable

38,100

Capital Stock

Prepaid Insurance

8,000

$50,000 6,400

Rent Expense

36,000 42,000

Cash

13,500

Retained Earnings

Dividends

16,000

Supplies

3,200

Supplies Expense

9,000

Fees Revenue

538,000

Insurance Expense

6,000

Unearned Rent

13,500 18,000

Land

40,000

Utilities Expense

Miscellaneous Expense

12,000

Wages Expense

476,800

Required Prepare a trial balance, listing the accounts in their normal order.

Exercise 4 Lynn Cantwell, an architect, organized Cantwell Architects on July 1, 2014. During the month, Cantwell Architects completed the following transactions: a. Issued capital stock to Lynn Cantwell in exchange for $25,000. b. Paid July rent for office and workroom, $2,750. c. Purchased automobile for $30,000, paying $4,000 cash and giving a note payable for the remainder. d. Purchased office and computer equipment on account, $9,000. e. Paid cash for supplies, $1,600. f. Paid cash for annual insurance policies, $2,400. g. Received cash from client for services performed, $11,150. h. Paid cash for miscellaneous expenses, $300. i. Paid cash to creditors on account, $3,500. j. Paid note payable, $550. k. Received invoice for advertising service, due in August, $1,500. 3

l. Perform service for credit customers, $17,300. m. Paid salary of assistant, $2,200. n. Paid the utility bill of July, $815. Required a- Journalize the July transactions. b- Post the accounts used in the general journal using the three-column form of the general ledger. c- Prepare a trial balance at July 31, 2014.

Exercise 5 Lenovo Enterprise was started on January 1 by Mr. Dan. During January, the following events and transactions occurred: Jan 1

Mr. Dan invested $80,000 cash in exchange of common stock.

10 Purchased Building costing $100,000 on account from Tala Real Estate. 15 Paid Salaries of $3,000. 18 performed services on account totaling $5,000. 19 Received $2,500 in advance from Slam Company for services expected to be completed by the end of the year. 23 Purchased Equipment for $5,000 cash. 25 Paid advertising bill, $2,000. 26 Paid half of balance due to Tala Real Estate. 28 Received $2,000 cash from customer billed in Jan 18. 30 Paid $4,000 for a 2-year insurance policy. Required 1- Journalize the given transactions. 2- Post the accounts used in the general journal using the T-account form of the general ledger.

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Section C – Financial Statements Preparation Exercise 1 The trial balance of PS Music as of July 31, 2014 is presented below: PS Music Trial Balance July 31,2014 Accounts

Debit

Cash Accounts Receivable

$9,945

Credit

4,150 275

Supplies Prepaid Insurance

2,475

Office Equipment Accounts Payable

7,450 $8,350

Wages Payable

140

Unearned Revenue

3,600

Capital Stock

9,000

Dividends

1,750

Fees Earned

21,200

Music Expense

3,610

Wages Expense

2,940

Office Rent Expense

2,550

Advertising Expense

1,500

Equipment Rent Expense

1,375

Utilities Expense

1,215

Supplies Expense

925

Insurance Expense

225

Depreciation Expense

50

Miscellaneous Expense

1,855

Total

$42,290

$42,290

Required From the above trial balance, prepare an income statement, a retained earnings statement, and a balance sheet for PS Music. 5

Exercise 2 Labrador Weight Loss Co. offers personal weight reduction consulting services to individuals. After all the accounts have been closed on June 30, 2014, the end of the current fiscal year, the balances of selected accounts from the ledger of Labrador Weight Loss Co. are as follows: Accounts Payable Accounts Receivable

$ 18,500 78,250

Prepaid Insurance

$ 19,200

Prepaid Rent

18,000 290,000

Retained Earnings

509,000

Land

Capital Stock

100,000

Salaries Payable

8,500

Supplies

5,350

Unearned Fees

9,000

Cash Equipment

? 196,700

Required Prepare a classified balance sheet that includes the correct balance for Cash.

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Exercise 3 The trial balance of Harbor Reality as of July 31, 2014 is presented below: Harbor Reality Trial Balance July 31,2014 Account Title Cash Accounts Receivable Supplies Prepaid Insurance Office Equipment Accounts Payable Unearned Fees Wages Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Depreciation Expense Rent Expense Utilities Expense Supplies Expense 2Insurance Expense Miscellaneous Expense Total

Dr. $3,425 8,000 380 305 37,000

Cr.

$925 750 440 5,000 24,000 5,200 60,625 22,855 4,950 4,200 2,715 890 315 1,505 $91,740

$91,740

Required From the above trial balance, prepare an income statement, a retained earnings statement, and a balance sheet for Harbor Reality.

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