Q 1 : Analyze the transactions of a business organized as a proprietorship described below and
indicate their effect on the basic accounting equation. Use a plus sign (+) to indicate an increase
and a minus sign (–) to indicate a decrease.
Assets
=
Liabilities
+
Owner's Equity
1. Received cash for services rendered.
_______
______
_______
2. Purchased office equipment on credit.
_______
______
_______
3. Paid employees' salaries.
_______
______
_______
4. Received cash from customer in payment
on account.
_______
______
_______
5. Paid telephone bill for the month.
_______
______
_______
6. Paid for office equipment purchased in
transaction 2.
_______
______
_______
7. Purchased office supplies on credit.
_______
______
_______
8. Owner withdrew cash for personal
expenses.
_______
______
_______
9. Obtained a loan from the bank.
_______
______
_______
_______
______
_______
10. Billed customers for services rendered.
…………………………………………………………………………………………………………….
Q 2 : Under a double-entry system, show how the entry in each statement is entered in the ledger
by using debit or credit to indicate the increase or decrease in the affected account.
Debit or Credit
1.
An increase in Salary Expense.
__________________
2.
A decrease in Accounts Payable.
__________________
3.
An increase in Prepaid Insurance.
__________________
4.
An increase in Owner's Capital.
__________________
5.
A decrease in Office Supplies.
__________________
6.
An increase in Owner's Drawings.
__________________
7.
An increase in Service Revenue.
__________________
8.
A decrease in Accounts Receivable.
__________________
9.
An increase in Rent Expense.
__________________
A decrease in Store Equipment.
__________________
10.
Q 3 : Transactions for Zaid Company for the month of October are presented below. Journalize
each transaction and identify each transaction by number.
1. Invested an additional $40,000 cash in the business.
2. Purchased land costing $28,000 for cash.
3. Purchased equipment costing $12,000 for $4,000 cash and the remainder on credit.
4. Purchased supplies on account for $800.
5. Paid $1,000 for a one-year insurance policy.
6. Received $3,000 cash for services performed.
7. Received $4,000 for services previously performed on account.
8. Paid wages to employees for $2,500.
9. Zaid withdrew $1,000 cash from the business.
……………………………………………………………………………………………………………….
.
Q 4 : The ledger account balances for Zaid Company are listed below.
Accounts Payable
Accounts Receivable
Cash
Zaid, Capital
Zaid, Drawing
Repair Revenue
Salaries Expense
Unearned Revenue
Utilities Expense
$ 5,000
7,000
10,000
11,000
4,000
40,000
25,000
2,000
12,000
Instructions
Prepare a trial balance in proper form for Zaid at December 31, 2005.
……………………………………………………………………………………………………………
Q 5: On July 1, 2005, Zaid Company pays $6,000 to its insurance company for a 2-year
insurance policy.
On July 2, 2005, Zaid Insurance Company received $12,000 from a client for a 2-year insurance
policy.
Instructions
Prepare the necessary journal entries for Zaid on July and December 31
……………………………………………………………………………………………………………..
Q 6: Prepare the necessary adjusting entry for each of the following:
1. Services provided but unrecorded totaled $700.
2. Accrued salaries at year-end are $1,000.
3. Depreciation for the year is $600.
……………………………………………………………………………………………………………
Q 7 : Prepare the necessary closing entries based on the following selected accounts.
Accumulated Depreciation
$10,000
Depreciation Expense
5,000
Jones, Capital
20,000
Jones, Drawing
12,000
Salaries Expense
15,000
Service Revenue
30,000
………………………………………………………………………………………………………….
Q 8 : As Zaid was doing his year-end accounting, he noticed that the bookkeeper had made
errors in recording several transactions. The erroneous transactions are as follows:
(a) A check for $700 was issued for goods previously purchased on account. The bookkeeper
debited Accounts Receivable and credited Cash for $700.
(b)
A check for $680 was received as payment on account. The bookkeeper debited Accounts
Payable for $860 and credited Accounts Receivable for $860.
(c)
When making the entry to record the year's depreciation expense, the bookkeeper debited
Accumulated Depreciation for $1,500 and credited Cash for $1,500.
When accruing interest on a note payable, the bookkeeper debited Interest Receivable for
$200 and credited Interest Payable for $200.
(d)
Instructions
Prepare the appropriate correcting entries. (Do not reverse the original entries.)