Accounting With Solutions

 

Assignment Basic Accounting

Prerequisite Before you take this assessment, it is recommended that you go through the module / courses to develop basic understanding of  the topic. All these modules are beginner friendly and self-paced. Once completed, you are advised to take this assessment to further reinforce and reflect the learnings.

 

Assignment 1. Basic Accounting Journal Entries Exercise Duration: You should try and finish this exercise within 15 minutes. •

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Q: On March 1, 2020, Abraham Taylor established Fast Purpose Machines Pvt. Ltd. Abraham completed the following transactions during the month of March: • • • • • • •

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a. Opened a business bank account with a deposit of 30,000 from personal funds. b. Purchased supplies (pens, file folders, papers, etc.) on account, 2,650. c. Paid creditor on account, 1,500. d. Earned sales commissions, receiving cash, 36,750. e. Paid rent on office and equipment for the month, 5,200. f. Withdrew cash for personal use, 8,000. g. Paid automobile expenses (including rental charge) for month, 2,500, and miscellaneous expenses, 1,200. h. Paid office salaries, 9,250. i. Determined that the cost of supplies on hand was 900; therefore, the cost of supplies used was 1,750.

Indicate the effect of each transaction.

 

Solution to Exercise 1 •

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http://www.accounting-basics-forstudents.com/basic-accounting-journal-entriesexercise.html a). Cash on hand.......30,000.00 Investment.................30,000.00 To record investment by owner. b). Supplies.............. Supplies...............2,650.00 .2,650.00 Accounts Payable..............2,650.00 Payable..............2,650.00 To record purchase supplies on account. acc ount.

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c). Accounts Payable........1,500.00 Cash.........................1,500.00 To record payment to creditor. d). Cash.............. Cash....................36,750.00 ......36,750.00 Sale commission................36,750.00 commission................36,750.00 To record earned sale s ale commission.

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e). Rent expense...............5,200.00 expense...............5,200.00 •

e). Rent expense...............5,200.00 expense...............5,200.00 Cash......................... Cash.............. ...............5,200.00 ....5,200.00 To record paid for office and equipment rental f). Withdraw Withdraw............... ................8,000.00 .8,000.00 Cash..........................8,000.00 To record withdraw by owner. g). Rent expense...............2,500.00 expense...............2,500.00 Miscellaneous expense......1,200.00 Cash............................3,700.00 To record payment for automobile & miscellaneous expense. h). Salaries expense.........9,250.00 expense.........9,250.00 Cash..........................9,250.00 To record payment for office staff salaries. i). Supplies expense............1,750.00 expense............1,750.00 Supplies on hand.................1,750.00 hand.................1,750.00 To record supplies expense for march.

 

Assignment 2. Trial Balance Exercise •

Your task: •

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1. Prepare the trial balance a as s at Dec 31, 2019 for Impressario Security Services Inc.

Time limit: 25 minutes

 

Trial balance details and transactions •

The trial balance of Impressario Impressar io Security Security.. as of January 1, 2019 had the following normal balances: • • • • •

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The following transactions took place during 2019 for Impressario Security: 1.

Paid Paid the the sal salar arie ies sp pay ayab able le fr from om 2018.

Cash 74,210 Accounts receivable 13,500 Supplies 200 Prepaid rent 3,200 Merchandise inventory (24 @ $265; 1 @ $260) 6,620

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On Marc March h 1,a20 2019 19,, petty IImp mpre ress ssar ario io established $100 cash fund to handle small expenditures. Paid Paid $4 $4,8 ,800 00 on Ma May y1 1,, 2 201 019, 9, fo forr one year's lease on the company van in advance. Paid Paid $7 $7,2 ,200 00 on Ma May y 2, 2,20 2019 19 fo forr one year's office rent in advance.

Land 4000payable 1,950 Accounts Unearned revenue 980 Salaries payable 1,000 Common stock 50,000 Retained earnings 47,800

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Purc Purcha hase sed d$ $40 400 0o off su supp ppli lies es on account. Purc Purcha hase sed d 100 100 al alar arm m syst system ems s for $28,000 cash during the year. So Solld 102 102 alar alarm ms sy yste tems ms fo forr $57,120. All sales were on account. (Compute cost of goods sold using the FIFO cost flow method) Pa Paiid $2,1 $2,100 00 on ac acc cou ount nts s payable during the year.

9. Reple Repleni nishe shed d the p pet etty ty c cash ash ffund und on August 1. At this time, the petty cash fund had only $7 of of currency left. It contained the following receipts: office supplies expense $23, cutting grass $55, and miscellaneous $14. 10. Billed $52,000 of moni monitorin toring g services for the year. 11. Paid install installers ers an and d othe otherr employees a total of $25,000 cash for salaries. 12. Collected Collected $89,300 $89,300 of accounts receivable during the year. 13. Paid $3,600 $3,600 of a advert dvertising ising expense during the year. 14. Paid $2,500 $2,500 of uti utilities lities expense for the year. 15. Paid a dividend dividend of $10,000 tto o the shareholders.

 

Solution to Exercise 2. Trial Balance for Impres Imp ressar sario io (P (Pali alicio cio))

** Cash includes $100 petty cash. Calculation of cash balance: 74,210 74,210 - 1,000 1,000 - 4,800 4,800 - 7,200 7,200 - 28, 28,000 000 - 2,100 2,100 - (10 (100 07) - 25,000 25,000 + 89 89,30 ,300 0 - 3,600 3,600 - 2,500 2,500 - 10,000 10,000 = 79,217 The opening balance of prepaid rent ($3,200) has been expensed out during 2016 as we have assumed this rent (that was paid the previous year) applies to the 2016 year. This is a likely assumption as there was a new prepaid rent cash payment on 2 May May,, 2016. It is not stated st ated in the question whether the unearned revenue of $980 at the beginning of 2016 was actually earned during the year. In this solution we have assumed that the unearned revenue still remains unearned at the end of 2016. However, it is quite acceptable to treat this as having been earned during 2016. If treating it as earned during 2016 one would add $980 to revenue and remove the unearned revenue account accou nt ($980 - $980) $980)..

 

Assignment 3. Creditor, Purchasers and Cost of Goods Sold Exercise Duration: 15 mins •

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YOUR TASK a) Calculate purchases. b) If purchases during February were $39,000 what is the Cost of Goods Sold for February?

Balances atcontrol 31 January 2019: ...............$32,400 Debtors account........................ account.............. .....$32,400 •

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Balances at 28 February 2019: • • •

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Debtors control account........................ account.............................$24,000 .....$24,000 Creditors control account............. account....................... ..............$29,160 ....$29,160 Inventory...................................................$36,000

Extract from cash payments journal at 28 February 2019: •

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Creditors control account............. account....................... ..............$25,200 ....$25,200 Inventory...................................................$30,000

Payments to creditors.................... creditors.............................. .............$41,040 ...$41,040

Additional Information: • • •

a) Gross profit mark-up is 20% on cost b) Inventory is kept on the perpetual system c) All purchases and 80% of sales are on credit

 

Solution to Exercise 3 •

Closing balance creditors control = Opening balance creditors control + Creditt Purchases Credi Purchases - Payments Payments to Creditors Creditors $29,160 = $25,200 + Credit Purchases - $41,040 If we switch this around and make Credit Purchases the subject: Credit Purchases Purchases = $29,160 $29,160 - $25,200 + $41,400 = $45,360

Since credit purchases make up 100% of the purchases, the full purchases figure is also also $45, $45,360 360 . •

Cost of Goods Sold = Opening inventory + Purchases - Closing Inventory = $30,000 $30,000 + $39 $39,000 ,000 - $36,000 $36,000 = $33,000