Accounting Exercise
T-Accounts
The following transactions are for Max Holiday’s law practice.
A. Record the transactions in the t-accounts provided.
B. Add up all of your debits and all of your credits at the bottom of the sheet.
1. On December 1, Max Holiday invested $9,000 in a new law practice.
2. Purchased books for a law library, paying cash of $2,500.
3. Purchased office equipment for cash, $5,600.
4. Purchased on account from Equip-It Company law library items, $380, and
office equipment, $1,280.
5. Completed legal work for a client (Ricky Heath) and immediately collected a
$2,200 fee.
6. Completed legal work for a client (Andrew Sohm) on account and billed the
client $1,700 for the services rendered.
7. Mr. Sohm pays $1,000 of his legal fee billed in transaction 6.
8. Paid Equip-It Company $900 of the $1,660 owed for the items purchased on
account in transaction 4.
9. Max Holiday withdrew $1,100 from the law practice for personal use.
10. Purchased office supplies on account from Jason’s Office Supplies for $400.
11. Mr. Sohm pays the remaining $700 of his legal bill.
12. Max Holiday’s purchases a new company vehicle for $25,000. He pays for it
by getting a bank loan from Greedy Finance.
REMEMBER
Type of Accounts
ASSET accounts
LIABILITY and OWNER’S
EQUITY accounts
INCREASES
DEBIT
DECREASES
CREDIT
CREDIT
DEBIT
1
Bank
$9,000
A/R
R. Heath
Office
Equipment
Office
Supplies
A/P -Jason’s
Office Supplies
A/P – Equip-it
Company
A/R
A. Sohm
Law Library
Automobile
Greedy
Finance
Owner’s
Equity
1
TOTAL DEBIT
_____________________
TOTAL CREDIT
_____________________