MODERN UNIVERSITY FOR BUSINESS AND SCIENCE

International School of Business

Accounting Department
Assignment I
Fall 2020-2021
ACC201 – Principles of Accounting I

Student’s Name: ________________________________________________________

Student ID #: ___________________________________________________________

Instructor’s Name: _______________________________________________________

Assignment weight: 25% of the course

Grading Scheme Learning Outcomes

Sections Weight Grade This exam will cover Learning Outcomes:
 LO1. State the basic accounting equation, and define
First Question
42% assets, liabilities, and owner’s equity.
 LO2. Analyze the effects of business transactions on the
Second Question
58% basic accounting equation.
 LO3. Understand what the four financial statements are
and how they are prepared.
 LO4. Define debits and credits and explain how they are
Final Grade used to record business transactions.
 LO5. Explain what a journal is and how it helps in the
recording process.
 LO6. Prepare a trial balance and explain its purposes.

Kindly, make sure that you read and understand the following points:
 Notes are NOT allowed.
 Your answers should be applied onto these sheets only.

Good Luck 

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I. Smith Johnson opened a travel agency and during the first month of operations completed the
following transactions:

June 1 Smith invested $75,000 cash in the business

June 5 Paid $2,500 for office supplies
June 7 Purchased office equipment for $8,000 on account
June 9 Paid $7,000 for one year insurance
June 16 Incurred electricity expenses of $500 that will be paid in the near future
June 20 Paid $2,000 for previously purchased office equipment
June 23 Withdrew $500 cash for personal use
June 26 Revenues earned during the month were $5,500 cash and $3,000 on account
June 29 Paid monthly rent of $1,200
June 30 Paid employees’ salaries of $2,500

Journalize the above listed transactions (42 pts.) (2 pts. each entry)

Date Account Titles Ref. Debit Credit

June 1 Investment $75,000
Cash $75,000
June 5 Office supplies $2,500
Cash $2,500
June 7 Office Account $8,000
Accounts payable $8,000
June 9 Prepaid insurance expense $7,000
Cash $7,000
June 16 Electricity expenses $500
Accrued expense $500
June 20 Accounts Payable $2,000
Cash $2,000
June 23 John Smith, Drawings $500
Cash $500
June 26 Cash $5,500
Accounts Receivable $3,000
Service revenue $8,500
June 29 Rent expense $1,200
Cash $1,200
June 30 Salaries expense $2,500
Cash $2,500

II. Adam Hanks started his own consulting firm, Adam consulting, on May 1, 2010. The following
transactions occurred during the month of May:

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 May 1 Adam invested $8,500 cash in the business
May 3 Purchased $500 of supplies on account
May 5 Paid $50 to advertise in a newspaper
May 9 Received $1,000 cash for services provided
May 12 Withdrew $700 cash for personal use
May 15 Earned revenues of $2,750 cash and $2,500 on account
May 17 Paid $3,000 for employee salaries
May 23 Received $1,000 cash for services provided on account on May 15
May 26 Borrowed $5,000 from the bank on a note payable
May 28 Purchased office furniture for $2,400 cash
May 30 Paid $800 for office rent for the month

a) Show the effects of the transactions on the accounting equation using the following tabular
(42 pts.) (1.5 pt. each entry and 1 pt. for each total)
b) Prepare an income statement for the month of May (6 pts.)
c) Prepare a balance sheet at May 31, 2010 (10 pts.)

a) Adam Consulting

Assets = Liabilities + Owner’s Equity

Capital, Drawings, Revenues,
Date + + + = + +Expenses (Specify)

May1

12

15

17

23

26

28

30

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