DFA5058 Tutorial Chapter 3 Solution

DFA5058 (Financial Accounting)/Chapter 3

Tutorial Chapter 3 Solution Accounting Cycle II Question 1 Selected transactions for Anna, an interior decorator, in her first month of business, are as follows. Jan

2 3 9 12 16 18 24 28 29 29 31

Invested RM25,000 cash in business. Purchased used car for RM6,000 cash for use in business. Purchased supplies on account for RM1,000. Billed customer RM2,000 for service performed. Paid RM250 cash for advertising expenses. Received RM1,000 cash from customers billed on January 12. Paid creditor RM500 cash on balance owed. Withdrew RM1,500 cash for personal use of owner. Paid salary RM1,000 cash. Paid RM200 cash for utilities. Received RM2,000 cash for the service performed.

Instruction Journalize the above transactions. Answer 1

Anna, General Journal Account Titles and Explanation

Date Jan 2 Cash Anna, Capital 3 Car Cash 9 Supplies Account payable 12 Account Receivable Service revenue 16 Advertising expenses Cash 18 Cash Account receivable 24 Account Payable Cash 28 Anna, Drawings Cash 29 Salaries Expense Cash 29 Utilities Expenses Cash 31 Cash Service revenue

Ref

Debit 25,000 6,000 1,000 2,000 250 1,000 500 1,500 1,000 200 2,000

Credit 25,000 6,000 1,000 2,000 250 1,000 500 1,500 1,000 200 2,000

DFA5058 (Financial Accounting)/Chapter 3

Question 2 Ronald Dee is a licensed architect. During the first month of the operation of his business, the following events and transactions occurred. Apr

1 1 2 3 10 11 20 25 30

Invested RM30,000 cash. Hired a secretary receptionist at a salary of RM300 per week payable monthly. Paid office rent for the month RM800. Purchased architectural supplies on account from Halo Company RM1,500. Completed design of a building and billed client RM900 for services. Received RM500 cash advance from R.Welk for the design of a new home. Received RM1,500 cash for services completed and delivered to P.Donahue. Paid secretary receptionist for the month RM1,500. Paid RM600 to Halo Company for accounts payable due.

Instructions a) Journalize the transactions. b) Post to the ledger accounts. c) Prepare a trial balance on 30 April 2011. Answer 2 (a)

Ronald Dee, Architect General Journal Account Titles and Explanation Ref

Date Apr 1 Cash Ronald Dee, Capital No entry – this is not a transaction 2 Rent Expense Cash 3 Supplies Accounts Payable 10 Accounts Receivable Service Revenue 11 Cash Unearned Revenue 20 Cash Service Revenue 25 Salaries Expense Cash 30 Accounts Payable Cash (b)

Debit 30,000

Credit 30,000

800 800 1,500 1,500 900 900 500 500 1,500 1,500 1,500 1,500 600 600 Cash

DFA5058 (Financial Accounting)/Chapter 3

Apr 1 Ronald Dee, Capital 11 Unearned Revenue 20 Service Revenue May 1 Balance b/f Apr 11 Service Revenue May 1 Balance b/f Apr 3 Accounts Payable May 1 Balance b/f Apr 30 Cash Balance c/f

Apr 30 Balance c/f

Apr 30 Balance c/f

Apr 30 Balance c/f

Apr 25 Cash May 1 Balance b/f Apr 2 Cash May 1 Balance b/f

30,000 500 1,500

Apr 2 Rent Expense 25 Salaries Expense 30 Accounts Payable Balance c/f

27,000 29,100 Accounts Receivable 900 Apr30 Balance c/f 900 900 Supplies 1,500 Apr30 1,500 1,500

Balance c/f

Accounts Payable 600 Apr 3 Supplies 900 1,500 May 1 Balance b/f Unearned Revenue 500 Apr 12 Cash 500 May 1 Balance b/f Ronald Dee, Capital 30,000 Apr 1 Cash 25,000 May 1 Balance b/f Service Revenue 2,400 Apr 10 Accounts Receivable 20 Cash 2,400 May 1 Balance b/f Salaries Expense 1,500 Apr 30 Balance c/f 1,500 1,500 Rent Expense 800 Apr 30 800 800

Balance c/f

800 1,500 600 29,100 27,000

900 900

1,500 1,500

1,500 1,500 900 500 500 500 30,000 30,000 30,000 900 1,500 2,400 2,400 1,500 1,500

800 800

DFA5058 (Financial Accounting)/Chapter 3

(c)

RONALD DEE, ARCHITECT Trial Balance 30 April 2011

Cash Accounts Receivable Supplies Accounts Payable Unearned Revenue Judi Dench, Capital Service Revenue Salaries Expense Rent Expense

Debit (RM) 29,100 900 1,500

Credit (RM)

900 500 30,000 2,400 1,500 800 RM 33,800

RM 33,800

Question 3 Wonder Park was started on March by Mr. Arnold. The following selected events and transactions occurred during March. Mar 1 Mr. Arnold invested RM50,000 cash in the business. 4 Purchased land costing RM30,000 for cash. 8 Incurred advertising expense of RM1,500 on account. 11 Hired park manager at a salary of RM3,000 monthly, effective April 1. 12 Paid RM1,500 cash for a one year insurance policy. 13 Received RM5,700 in cash for admission fees. 15 Paid salaries to employees RM2,000. 17 Withdrew RM500 cash for personal use. 20 Paid RM100 cash for stationeries expenses. 25 Received RM7,000 in cash for admission fees. 30 Paid RM900 on balance owed for advertising incurred on March 8. Instruction Journalize the March transactions. Answer 3

Wonder Park General Journal Account Titles and Explanation

Date Apr 1 Cash Arnold, Capital 4 Land Cash 8 Advertising Expense Accounts Payable 11 No entry 12 Prepaid Insurance Cash 13 Cash Admission Revenue

Ref

Debit 50,000 30,000 1,800

Credit 50,000 30,000 1,800

1,500 1,500 5,700 5,700

DFA5058 (Financial Accounting)/Chapter 3

15 Salaries Expense Cash 17 Arnold, Drawing Cash 20 Stationeries Expenses Cash 25 Cash Admission Revenue 30 Accounts Payable Cash

2,000 2,000 500 500 100 100 7,000 7,000 900 900

Question 4 Cindy is a licensed CPA. During the first month of operations of her business the following events and transactions occurred. May

1 2 3 7 11 15 25 31

Cindy invested RM20,000 cash. Purchased personal computer, RM2,000 using her own money. Purchased RM1,500 of supplies on account from Tan Supply Company. Paid office rent of RM800 cash for the month. Completed a tax assignment and billed client RM2,100 for services provided. Received cash of RM1,200 for services completed for H.Arnold Co. Paid secretary receptionist RM1,000 salary for the month. Paid 40% of balance due Tan Supply Company.

Instructions a) Journalize the transactions. b) Post to the ledger accounts. c) Prepare a trial balance on 31 May 2011. Answer 4 (a)

Cindy, CPA General Journal Account Titles and Explanation

Date May 1 Cash Cindy, Capital 2 No entry 3 Supplies Accounts Payable 7 Rent Expense Cash 11 Accounts Receivable Service Revenue 17 Cash Service Revenue 25 Salaries Expense

Ref

Debit 20,000

Credit 20,000

1,500 800 2,100 1,200 1,000

1,500 800 2,100 1,200

DFA5058 (Financial Accounting)/Chapter 3

Cash 31 Accounts Payable Cash (b) May 1 Cindy, Capital 17 Service Revenue

Jun 1 Balance b/f May 11 Service Revenue Jun 1 Balance b/f

May 3 Accounts Payable Jun 1 Balance b/f May 31 Cash Balance c/f

May 31 Balance c/f

May 31 Balance c/f

May 25 Cash Jun 1 Balance b/f May 7 Cash Jun 1 Balance b/f

1,000 600 Cash 20,000 May 7 Rent Expense 1,200 25 Salaries Expense Accounts Payable Balance c/f 21,200 18,800 Accounts Receivable 2,100 May 31 Balance c/f 2,100 2,100 Supplies 1,500 May 31 1,500 1,500

Balance c/f

Accounts Payable 600 May 3 Supplies 900 1,500 Jun 1 Balance b/f Cindy, Capital 20,000 May 1 Cash 20,000 Jun 1 Balance b/f Service Revenue 3,300 May 11 Accounts Receivable 17 Cash 3,300 Jun 1 Balance b/f Salaries Expense 1,000 May 31 1,000 1,000 Rent Expense 800 May 31 800 800

600 800 1,000 600 18,800 21,200

2,100 2,100

1,500 1,500

1,500 1,500 900 20,000 20,000 20,000 2,100 1,200 3,300 3,300

Balance c/f

1,000 1,000

Balance c/f

800 800

DFA5058 (Financial Accounting)/Chapter 3

(c)

Cindy, CPA Trial Balance 31 May 2011

Cash Accounts Receivable Supplies Accounts Payable Cindy, Capital Service Revenue Salaries Expense Rent Expense

Debit (RM) 18,800 2,100 1,500

1,000 800 RM 24,200

Credit (RM)

900 20,000 3,300 RM 24,200

Question 5 At 1 October 2010, Mystar Enterprise has a balance in Cash, debit balance RM10,000; Land, debit balance RM30,000, Malik, capital, credit balance RM40,000. During October, the following transactions were happened : Oct 1 5 10 12 19 20 25 27

Paid interest expense of RM500. Purchased office furniture on credit, RM800. Performed service on credit for a customer, RM1,600 The owner took cash RM500 for personal use. Paid salaries staff, RM4,000. Sold land at cost RM30,000 for cash. Purchased building for RM140,000, paying RM20,000 cash and signing a note payable for the balance. Performed service to customer, RM3,500 and received cash immediately.

Instructions a) Open the related T-accounts with their 1 October balances. b) Post the transactions for October to the T-accounts affected. c) Prepare the trial balance for October.

Oct 1 Balance b/f 20 Land 27 Service Revenue

Nov 1 Balance b/f Oct 10 Service Revenue Nov 1 Balance b/f

Cash 10,000 Oct 1 Interest Expense 30,000 12 Malik, Drawing 3,500 19 Salaries Expense 25 Building 31 Balance c/f 43,500 18,500 Accounts Receivable 1,600 Oct 31 Balance c/f 1,600 1,600

500 500 4,000 20,000 18,500 43,500 1,600 1,600

DFA5058 (Financial Accounting)/Chapter 3

Oct 1

Balance b/f

Oct 25 Cash Notes Payable Nov 1 Balance b/f Oct 5 Accounts Payable Nov 1 Balance b/f

Oct 31 Balance c/f

Oct 31 Balance c/f

Oct 31 Balance c/f

Oct 12 Cash Nov 1 Balance b/f

Oct 31 Balance c/f

Oct 19 Cash Nov 1 Balance b/f

Land 30,000 Oct 20 Cash 30,000 Building 20,000 Oct 31 120,000 140,000 140,000 Office Furniture 800 Oct 31 800 800

Balance c/f

Balance c/f

Accounts Payable 800 Oct 5 Office Furniture 800 Nov 1 Balance b/f Malik, Capital 40,000 Oct 1 Balance b/f 40,000 Nov 1 Balance b/f

Balance c/f

Service Revenue 5,100 Oct 10 Accounts Receivable 27 Cash 5,100 Nov 1 Balance b/f Salaries Expense 4,000 Oct 31 4,000 4,000

140,000 140,000

Notes Payable 120,000 Oct 25 Building 120,000 Nov 1 Balance b/f

Malik, Drawing 500 Oct 31 500 500

30,000 30,000

Balance c/f

800 800

120,000 120,000 120,000

800 800 800

40,000 40,000 40,000

500 500

1,600 3,500 5,100 5,100 4,000 4,000

DFA5058 (Financial Accounting)/Chapter 3

Oct 1 Cash Nov 1 Balance b/f

Interest Expense 500 Oct 31 500 500

Balance c/f

500 500

Mystar Enterprise Trial Balance 31 May 2011 Cash Accounts Receivable Building Office Furniture Notes Payable Accounts Payable Malik, Capital Malik, Drawing Service Revenue Salaries Expense Interest Expense

Debit (RM) 18,500 1,600 140,000 800

500 4,000 500 RM 165,900

Credit (RM)

120,000 800 40,000 5,100 RM 165,900