Chapter – 1

Problem-1:
Rumon opens her law office on July 1, 2017. During the first month of operations, the following
transaction occurred:
1. Rumon invested $10,000 in cash in the law practice.
2. Paid $300 for July rent on office space.
3. Purchased office equipment on account $1000.
4. Provided legal services to clients for each cash $2000.
5. Borrowed $200 cash from a bank on a note payable.
6. Performed legal services for client on account $1200.
7. Paid monthly expenses: salaries & wages $1000, utilities $500, & advertising $200.
8. Rumon withdraws $700 cash for personal use.
Instructions:
a. Prepare a tabular summary of the transactions.
b. Prepare the income statement, owner’s equity & balance sheet at July 31,2017for Joan
Robinson.
Solve: (a)

Rumon
Summary of transaction
For the month of July 31, 2017

Date Assets = Liability + Owner’s Equity

Office Note
Cash Accoun Equipme Accoun Payable Capital Expen Reven With
t nt t se ue draw
Receiva Payable
ble

Bal.b/ - - - - - - - - -
d
1 +10000 +10000
2 (300) (300)
3 +1000 +1000
 4 +2000 +2000
5 +200 +200
6 +1200 +1200
7 (1000) (1000)
(500) (500)
(200) (200)
8 (700) (700)
Total 9500 1200 1000 1000 200 10000 (2000) 3200 (700)
check 11700 11700

Solve: (b)
Rumon
Income Statement
For the month of July 31, 2017

Particulars Details ($) Total ($)

Revenues
Service Revenue(3000+1500) 3200
Less: Expenses
Rent Expenses 300
Salaries & wages Expenses 1000
Utilities Expenses 500
Advertising Expenses 200
Total Expanses (2000)
Net income 1200

Rumon
Owner’s Equity Statement
For the month of July 31, 2017

Particulars Details ($) Total ($)

Beginning owner’s capital
Add:
Investment 10000
Net Income 1200
Less: 11200
Drawing (700)
 Ending owner’s capital 10500

Rumon
Balance Sheet Statement
For the month of July 31, 2017

Particulars Details ($) Total ($)

Assets:
Cash 9500
Account Receivable 1200
Office Equipment 1000
Total Assets 11700
Liabilities & Owner’s Equity:
Liabilities:
Note Payable 200
Account Payable 1000
Total Liabilities 1200
Owner’s Equity:
Ending owner’s capital
Total Liabilities & Owner’s Equity 10500
11700

Problem-2:
Salem opens her law office on July 1, 2017. On July 31 the balance sheet showed Cash $5000,
A/C Receivable $2000, Supplies $700, Equipment $3000, A/C Payable $4200, Owner’s capital
$6000. During August the transaction occurred.
1. Collected $1500 of A/C Receivable.
2. Paid $1200 cash on A/C Payable.
3. Earned revenue of $ 7500, of which $3000 is collected in cash & the balance is due in
September.
4. Purchased additional office equipment for $1500, paying $500 in cash & balance on
account.
5. Paid salaries $3000 rent for August $700, & advertising expenses $100.
6. Withdraw $500 for personal use.
7. Receive $1000 from bank money borrowed on a note payable.
8. Incurred utility expenses for month on account $390.
Instructions:
 a. Prepare a tabular summary of the transactions.
b. Prepare the income statement, owner’s equity & balance sheet at August 31,2017for
Jodi Salem.
Solve: (a)
Salem
Summary of transaction
For the month of August 31, 2017

Date Assets = Liability + Owner’s Equity

Supply Note
Cash Accoun Equip Account Payable Capital Expen Reven With
t ment Payable se ue draw
Receiva
ble

Bal.b/ 5000 2000 700 3000 4200 - 6000 - - -

d
1 +1500 (1500)
2 (1200) (1200)
3 +3000 +4500 +7500
4 (500) 1000 1000
5 (3000) (3000)
(700) (700)
(100) (100)
6 (500) (500)
7 +1000 +1000
8 +390 (390)
Total 4500 5000 700 4000 4390 1000 5500 (4190) 7500 (500)
Check 14200 14200

Solve: (b)
Salem
Income Statement
For the month of August 31, 2017
Particulars Details ($) Total ($)
Revenues
Service Revenue 7500
Total Revenues
Less: Expenses
Salaries & wages Expenses 3000
Rent Expenses 700
Advertising Expenses 100
Utilities Expenses 390
Total Expanses (4190)
Net income 3310

Salem
Owner’s Equity Statement
For the month of August 31, 2017

Particulars Details ($) Total ($)

Beginning owner’s capital
Add:
Investment 6000
Net Income 3310
Less: 9310
Drawing (500)
Ending owner’s capital 8810

Salem
Balance Sheet Statement
For the month of August 31, 2017

Particulars Details ($) Total ($)

Assets:
Cash 6000
Account Receivable 5000
Supply 700
Equipment 4000
Total Assets 14200
Liabilities & Owner’s Equity:
Liabilities:
Note Payable 1000
Account Payable 4390
 Total Liabilities 5390
Owner’s Equity:
Ending owner’s capital 8810
Total Liabilities & Owner’s Equity 14200

Chapter – 2

Problem-1:
Mahin opened the Campus Laundromat on September 1, 2012. During the first month of
operations, the following transactions occurred.
Sept. 1. Mahin invested $40,000 cash in the business.
2. The company paid $1,000 cash for store rent for September.
3. Purchased washers and dryers for $45,000, paying $20,000 in cash and signing a $25,000, 6-
month, 12% note payable.
4. Paid $1,200 for a one-year accident insurance policy.
10. Received a bill from the Daily News for advertising the opening of the laundromat $500.
20. Mahin withdrew $700 cash for personal use.
30. The company determined that cash receipts for laundry services for the month were
$5,200.
Instructions:
(a) Journalize the September transactions. (Use J1 for the journal page number.)
(b) Open ledger accounts and post the September transactions.
(c) Prepare a trial balance at September 30, 2012.

Solve: (a)
Campus Laundromat
General Journal

Date Account title & Explanation Ref. Debit Credit

 Sep. 1 Cash 40000
Owner’s Capital 40000
2 Rent Expenses 1000
Cash 1000
3 Equipment 45000
Cash 20000
Note payable 25000
4 Prepaid Insurance 1200
Cash 1200
10 Advertising Expenses 500
Account payable 500
20 Owner’s drawing 700
Cash 700
30 Cash 5200
Service revenue 5200

Solve: (b)
Campus Laundromat
General Ledger
Cash

Date Explanation Ref. Debit Credit Balance

Sep. 1 Owner’s capital 40000 40000
2 Rent Expenses 1000 39000
3 Note payable 20000 19000
4 Prepaid Insurance 1200 17800
20 Owner’s drawing 700 17100
30 Service revenue 5200 22300

Prepaid Insurance

Date Explanation Ref. Debit Credit Balance

Sep. 4 Cash 1200 1200

Equipment

Date Explanation Ref. Debit Credit Balance

Sep. 3 Cash 45000 45000
 Account payable

Date Explanation Ref. Debit Credit Balance

Sep. 10 Advertising Expenses 500 500

Owner’s capital

Date Explanation Ref. Debit Credit Balance

Sep. 1 Cash 40000 40000

Owner’s drawing

Date Explanation Ref. Debit Credit Balance

Sep. 20 Cash 700 700

Service revenue

Date Explanation Ref. Debit Credit Balance

Sep. 30 Cash 5200 5200

Note payable

Date Explanation Ref. Debit Credit Balance

Sep. 3 Cash 25000 25000

Advertising Expenses

Date Explanation Ref. Debit Credit Balance

Sep. 1 Account payable 500 500

Rent Expenses

Date Explanation Ref. Debit Credit Balance

Sep. 1 Cash 1000 1000

Solve: (c)
Campus Laundromat
Trial Balance
September 30, 2017

Account title Debit Credit

 Cash 22300
Prepaid Insurance 1200
Equipment 45000
Note payable 25000
Account payable 500
Owner’s capital 40000
Owner’s drawing 700
Service revenue 5200
Advertising Expenses 500
Rent Expenses 1000
total 70700 70700

Problem-2:
Abhi opened the dental center on April 1, 2012. During the first month of operations, the
following transactions occurred.
April. 1. Invest $20000 cash in her business.
1. Hired a secretary receptionist at a salary of $1000 per week payable monthly.
2. Paid office rent for the month $1200.
3. Purchased dental supplies on account from Dazzle company $3000.
10. Provided dental services & billed insurance companies $2100.
11. Received $500 cash advance from Leah for an implant.
20. Received $1500 cash for services performance for Michal.
30. Paid secretary receptionist for the month $700.
30. Paid $1400 to Dazzle for account payable due.
Instructions:
(a) Journalize the September transactions. (Use J1 for the journal page number.)
(b) Open ledger accounts and post the September transactions.
(c) Prepare a trial balance at April 30, 2012.

Solve: (a)
Abhi
General Journal
 Date Account title & Explanation Ref. Debit Credit
April. 1 Cash 20000
Owner’s Capital 20000
1 No entry – hire is not a financial transaction - -
2 Rent Expenses 1200
Cash 1200
3 Supplies 3000
Account payable 3000
10 Account receivable 2100
Service revenue 2100
11 Cash 500
Unearned revenue 500
20 Cash 1500
Service revenue 1500
30 Salaries & wages Expenses 700
Cash 700
30 Account payable 1400
Cash 1400

Solve: (b)s
Abhi
General Ledger
Cash

Date Explanation Ref. Debit Credit Balance

April. 1 Owner’s capital 20000 20000
2 Rent Expenses 1200 18800
11 Unearned revenue 500 19300
20 Service revenue 1500 20800
30 Salaries & wages Expenses 700 20100
30 Account payable 1400 18700
Supply

Date Explanation Ref. Debit Credit Balance

3 Account payable 3000 3000
Account receivable

Date Explanation Ref. Debit Credit Balance

10 Service revenue 2100 2100
Rent Expenses
 Date Explanation Ref. Debit Credit Balance
2 Cash 1200 1200
Owner’s capital

Date Explanation Ref. Debit Credit Balance

1 Cash 20000 20000
Account payable

Date Explanation Ref. Debit Credit Balance

3 Supply 3000 3000
30 Cash 1400 1600
Service revenue

Date Explanation Ref. Debit Credit Balance

10 Account receivable 2100 2100
20 Cash 1500 3600
Unearned Service revenue

Date Explanation Ref. Debit Credit Balance

11 Cash 500 500
Salaries & wages Expenses

Date Explanation Ref. Debit Credit Balance

30 Cash 700 700

Solve: (c)

Abhi

Trial Balance

Account title Debit Credit

Cash 18700
Supplies 3000
Account receivable 2100
Account payable 1600
Owner’s capital 20000
Service revenue 3600
Unearned Service revenue 500
Salaries & wages Expenses 700
Rent Expenses 1200
total 25700 25700

Chapter – 3
Problem-1:
The adjusted trial balance columns of Falcetto Company’s worksheet for the year ended
December 31, 2012, are as follows.

Debit
Credit
Cash 30,000
Accumulated Depreciation–– 35,000
Accounts Receivable 15,100
Equipment
Inventory 20,000
Notes Payable 20,000
Prepaid Insurance 4,500
Accounts Payable 30,600
Equipment 90,000
Owner’s Capital 50,000
Owner’s Drawings 15,000
Sales Revenue 535,800
Sales Returns and
Interest Revenue 6,500
Allowances 3,700
677,900
Sales Discounts 5,000
Cost of Goods Sold 360,900
Freight-out 7,600
Advertising Expense 10,000
Salaries and Wages
Expense 70,000
Utilities Expense 25,000
Rent Expense 12,000
Depreciation Expense 4,000
Insurance Expense 3,500
Interest Expense 1,600
677,900
Instructions:
Prepare a multiple-step income statement for Falcetto Company.
Solve:
FALCETTO COMPANY
Income Statement
For the Year Ended December 31, 2012

Particulars Amounts($) Amounts($)

Sales revenues 535,800
Less:
Sales returns and allowances 3,700
Sales discounts 5,000 (8700)
Net sales 527,100
Less:
Cost of goods sold (360,900)
Gross profit 166,200
Less:
Operating expenses
Salaries and wages expense 70,000
Rent expense 12,000
Utilities expense 25,000
Advertising expense 10,000
Depreciation expense 4,000
Freight-out 7,600
Insurance expense 3,500
Total operating expenses (132,100)
Income from operations 34100
Add:
Other revenues and gains
Interest revenue 6,500
Other expenses and losses
Interest expense (1,600) (4,900)
Net income 29200