Principles of Accounting I
Revision
Exercise 1:
For each account indicate:

The classification: “Asset, “Liability” or “Owner’s Equity”.

Normal Balance: Debit or Credit.

Financial Statement: Income statement, Owner’s equity statement or Balance Sheet.
Account
Classification
Normal
Financial
Balance
statement
Accounts receivable
Owner’s Drawings
Unearned service revenue
Insurance expense
Rent Revenues
Inventory
Accounts payable
Equipment
Repair Expense
Mortgage payable
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Exercise 2:
Ronaldo opened a veterinary business on July 1. During August the following
transactions occurred.
August 2: Purchased equipment from “BioVete Company” for $5,000, paying $1,800 in cash
and the balance on account.
August 5: Ronaldo withdrew $1,000 cash for personal use.
August 6: Paid $400 cash for August office rent.
August 10: Paid $800 cash for a 1-year insurance policy.
August 13: Earned revenue of $4,000 from customer, of which $2,500 is received in cash and the
balance is due in 2 weeks.
August 15: Paid decoration expense for $1,200 and repair expense for $600 in cash.
August 20: Purchased supplies worth $1,700 with a $700 down payment. The remainder is due
in 20 days.
August 24: Received a $1,000 payment from customer for its due balance on August 13.
August 28: Paid the salary of $1,100$ for the secretary-receptionist.
Required:
a- Prepare the journal entries to record each transaction.
General Journal
Date
Account Title and Explanation
Ref.
Debit
Credit
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b. Post the “Owner’s drawing” and “Accounts payable” accounts using the three- column form of
general ledger.
Owner’s Drawings
Date
Explanation
Ref
Debit
Credit
Balance
Credit
Balance
Accounts payable
Date
Explanation
Ref
Debit
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Exercise 3:
The below are information related to Fast company on December 31, 2015:
Account receivable
$3,000
Cash
7,000
Equipment
10,000
Owner’s capital Jan 1 20,000
Owner’s Drawings
1,200
Note payable
2,700
Prepaid Rent
4,700
Salaries Expense
2,200
Service Revenue
10,000
Supplies
4,000
Supplies Expense
400
Utilities Expense
200
Instructions:
a) Prepare an Income Statement for the year ended December 31, 2015.
b) Prepare an Owner's Equity Statement; given the Net Income for the Year 2015 is equal to
$7,200.
c) Prepare a Classified Balance Sheet on December 31, 2015; given the owner's capital on
December, 31, 2015 is equal to $26,000.
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Exercise 4:
Given below is a list of account for Rino Company as of December 31, 2016. Each account
shows a normal balance.
Account
Account
Building
9,500
Cash
5,500
Accounts payable
2,000
Tax expense
2,000
Mr. Rino’s Capital
20,000
Service Revenue
9,000
Owner’s drawing
4,000
Utilities expense
1,000
Notes payable
1,500
Equipment
10,500
Instructions: Prepare a trial balance for December 31, 2016.
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