class exercise session 1,2

CLASS EXERCISES-SESSION-1,2(For course instructor Guidance)

Learning Objective:

1. What is accounting?2. The Accounting Equation.3. Users of Accounting.4. How to do transactional analysis?5. How to prepare journal entry.6. How to post entries in ledger accounts.7. How to prepare trial balance.

No. Q No. Page No.1 2A-1 932 2A-6 963 2B-5 99

Q No.1 Use following title of accounts to complete journal entries of given transactions. CASH A/C RECEIVABLE A/C PAYABLE RENT EXPENSEDRAWING CAPITAL SALARIES EXPENSE EQUIPMENTFURNITURE SERVICE INCOME SUPPLIES

1) Mr.A deposited into bank Rs.50,000 to start a business2) Paid rent for three months at Rs.2500 per month3) Bought office equipment from B&Co. for Rs. 10000, paid to them Rs.3000

and promised to pay the balance after two months.4) Rendered services to clients and received cash Rs. 5000 5) Purchase supplies for cash Rs. 4006) Paid salaries to staff Rs. 54007) Bought furniture for Rs. 3200,paid to K&Co. Rs.1200 and promised to pay

balance after one month8) Withdrew cash for personal use Rs. 30009) Billed to Nasir for services rendered Rs. 1250010) Received from Nasir Rs.5000

INSTRUCTIONA: Prepare journal entriesB: Post to ledger accountsC: Prepare a trial balance at July 31,2005

Q No.2

Write four steps of analysis for each transaction

1. Mr. Ahmed invested cash Rs. 125,0002. Bought merchandise for cash Rs.200003. Paid rent for the month Rs.50004. Purchase office supplies for Rs.15005. Sold goods for cash Rs.50006. Purchase goods on credit from Nasir Ali Rs.100007. Paid salaries to office staff Rs. 125008. Paid to Nasir Ali Rs.35009. Sold goods on credit to Abid Rs.1500010. Merchandise return to Nasir Ali Rs.25011. Goods were returned by Abid Rs.75012. Withdrew cash for personal use Rs.100013. Sold old machine at Rs.500

Q No.3 In July 2005, Nasir Jamal started business and completed following transactions. July 1 He deposited $ 165,000 cash in a business bank account.(use cash as title)July 2 Purchased equipment for $ 55,000 from ABC Co. paid $20,000 and balance will be paid after three month. July 7 Paid rent for three months $ 1500July 12 Purchase goods on credit from Khan & Co. $ 1200July 17 Paid salaries to staff $ 2500July 20 Paid to Khan & Co.$ 700July 23 Paid insurance $ 400July 27 Nasir withdrew $ 1500 cash from the business for personal use

INSTRUCTIONA: Prepare journal entriesB: Post to ledger accountsC: Prepare trial balance at July 31,2002

Q-4 Compute the missing amount in the accounting equation for each entity:

Assets Liabilities Owner's Equity

Company A $ ? $61,800 $34,400Company B 65,900 ? 34,400Company C 81,700 79,800 ?

Q-5 Oracle Corporation started 19X9 with total assets of $5,819 million and total liabilities of $2,861 million. At the end of 19X9, Oracle's total assets stood at $7,260 million, and total liabilities were $3,565 million.

Required

1. Did the owners' equity of Oracle Corporation increase or decrease during 19X9? By how much?

2. Identify two possible reasons for the change in owners' equity of Oracle during the year.

Q-6 Telemarketing Associates' balance sheet data at May 31, 20X2, and June 30, 20X2, follow:

May 31, 20X2 June 30, 20X2

Total assets $150,000 $195,000Total Liabilities 109,000 131,000

Required

Following are three assumptions about investments and withdrawals by the owner of the business during June. For each assumption, compute the amount of net income or net loss of the business during June 20X2.

1. The owner invested $5,000 in the business and made no withdrawals.

2. The owner made no additional investments in the business but withdrew $11,000 for personal use.

3. The owner invested $41,000 in the business and withdrew $6,000 for personal use.

Q. NO. 71. Khalid invested in business cash Rs.40000, office equipment Rs.60,0002. Purchase merchandise for cash Rs. 60003. Purchase goods on credit from Zahid Rs.100004. Sold merchandise on credit to Amir Rs.100005. Paid rent expense Rs.6006. Sold merchandise for cash Rs. 35007. Earned commission Rs. 100008. Purchase supplies on credit from Aleem Rs. 8009. Paid traveling expense Rs. 650 10. Sold merchandise to Mr. Kareem Rs. 4000 on credit.11. Khalid withdrew cash for personal use Rs. 300012. Rendered services to client and received commission Rs. 200013. Paid insurance for the month Rs. 500


Q. NO. 81. Khalid invested in business Rs.40000, Furniture Rs.24,000, equipment Rs.150002. Purchase merchandise for cash Rs. 60003. Purchase office stationary for Rs.20004. Purchase goods on credit from Zahid Rs.100005. Sold merchandise on credit to Amir Rs.100006. Paid rent expense Rs.6007. Sold merchandise for cash Rs. 35008. Billed to Mr. Bilal for service rendered Rs. 100009. Purchase supplies on credit from Aleem Rs. 80010. Paid traveling expense Rs. 650 11. Sold merchandise to Mr. Kareem Rs. 4000 on credit.12. Received cash from Mr. Kareem Rs.150013. Khalid withdrew cash for personal use Rs. 300014. Paid insurance for the month Rs. 50015. Received cash from Mr. Bilal Rs.8000


Q-9 Helen Ingersoll owns and operates an interior design studio called Ingersoll Interiors. The following amounts summarize the financial position of her business on August 31, 20X2:

Assets = Liabilities +Owner's Equity

Cash +Accounts

Receivable + Supplies + Land =Accounts Payable +

Helen Ingersoll, Capital

Bal. 2,250 1,500 12,000 8,000 7,750

During September 20X2, the following events occurred.

a. Ingersoll inherited $20,000 and deposited the cash in the business bank account.

b. Performed services for a client and received cash of $700.c. Paid off the beginning balance of accounts payable.d. Purchased supplies on account, $1,000.e. Collected cash from a customer on account, $1,000.f. Invested personal cash of $1,000 in the business.g. Consulted on the interior design of a major office building and billed the client for

services rendered, $2,400.h. Recorded the following business expenses for the month:

1. Paid office rent, $900.2. Paid advertising, $100.

i. Sold supplies to another business for $150 cash, which was the cost of the supplies.

j. Withdrew cash of $1,100 for personal use.

Required

1. Analyze the effects of the preceding transactions

2. Prepare General Journal entries of above transactions.3. Prepare General Ledger. 4. Prepare Trial Balance for the month ended September 30,20025. Prepare the income statement of Ingersoll Interiors for the month ended

September 30, 20X2.

6. Prepare the balance sheet of Ingersoll Interiors at September 30, 20X2.

Q -10 Following transactions were completed by Mr.khalid during the month of July,02.

July 1: Khalid invested in business cash Rs.55000 , office supplies Rs.1500, office equipment Rs.45000July3: Obtained loan from bank Rs.100,000July 5: Purchase office equipment from Karim &Co. for Rs.25000 and paid Rs.12000 July 10: Paid rent for office premises in advance for three moths Rs.3000 per month.July 12: Purchase goods on credit from ABC & Co. Rs 25000July 15: Sold merchandise to Kashif Rs.5000July 16 Paid salaries Rs.4500July 20: Paid to Karim Rs.2000 July 23: Received form Kashif Rs.1500July 25: Paid to ABC & Co. Rs.3000July 27: Paid installment of bank loan Rs 5000July 30: Paid advertising expense Rs 3000 INSTRUCTION

Prepare journal entries, T -account and Trial Balance.

Q-11 Recording transactions directly in the ledger, preparing a trial balance

Ken Mazanec obtained a corporate charter form the state of Pennsylvania and started a cable television service. During the first month of operations Mazanec completed the following selected transactions:

a. Mazanec began the business with an investment of $30,000 cash and a building valued at $50,000. The corporation issued common stock to Mazanec.

b. Borrowed $25,000 from the bank, signed a note payable.c. Paid $32,000 for transmitting equipment.d. Purchased office supplies on account, $400. e. Paid employee salary, $1,300.f. Received $500 for cable TV service performed for customers. g. Sold cable service to customers on account, $2,300.h. Paid $100 of the account payable created in d. i. Received a $600 bill for utility expense that will be paid in the near future.j. Received cash on account, $1,100.k. Paid the following cash expense:

(1) Rent on land, $1,000(2) Advertising, $800.

l. Declared and paid dividends of $2,600.

Required:

1. Open the following T-accounts: cash; Accounts Received; Office Supplies; Transmitting Equipment; Building; Accounts Payable; Note Payable; Common Stock; Dividends; Service Revenue; Salary Expense; Rent Expense; Advertising Expense; Utilities Expense.

2. Record the above transactions in the T-accounts using a journal. Use the letters to identify the transactions.

3. Trial Balance

Documents

class exercise session 1,2