Fundamental Assignment for Section 2

The following assets were received from Kareem Ismail: cash, $18,000 accounts receivable,
$5,000 supplies, $1,500; and office equipment, $10,750. There were no liabilities received.
Oct. 1. Paid three months’ rent on a lease rental contract, $4,800
2. Paid the premiums on property and casualty insurance policies, $2,700.
4. Received cash from clients as an advance payment for services to be provided and recorded it
as unearned fees, $3,150.
5. Purchased additional office equipment on account from Office Station Co., $1,250.
6. Received cash from clients on account, $2,000.
10. Paid cash for a newspaper advertisement, $325.
12. Paid Office Station Co. for part of the debt incurred on October 5, $750.
12. Recorded services provided on account for the period October 1–12, $5,750.
14. Paid part-time receptionist for two weeks’ salary, $900.
17. Recorded cash from cash clients for fees earned during the period October 1–17, $9,250.
18. Paid cash for supplies, $600.
20. Recorded services provided on account for the period October 13–20, $4,100.
24. Recorded cash from cash clients for fees earned for the period October 17–24, $4,850.
26. Received cash from clients on account, $3,450.
27. Paid part-time receptionist for two weeks’ salary, $900.
29. Paid telephone bill for October, $250.
31. Paid electricity bill for October, $300.
31. Recorded cash from cash clients for fees earned for the period October 25–31, $3,975.
31. Recorded services provided on account for the remainder of October, $2,500.
31. Kareem withdrew $7,500 for personal use.
Instructions
1. Journalize each transaction in a two-column journal,
2. Post the journal to a ledger of four-column accounts.
3. Prepare an unadjusted trial balance.
4. at the end of October, the following adjustment data or additional information.
a. Insurance expired during October is $225.
b. Supplies on hand on October 31 are $875.
c. Depreciation of office equipment for October is $400.
d. Accrued receptionist salary on October 31 is $200.
e. Rent expired during October is $1,600.
f. Unearned fees on October 31 are $1,150.
5. Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete
the spreadsheet.
6. Journalize and post the adjusting entries.
7. Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
9. Prepare closing entries. (Income Summary is account in the chart of accounts.) Indicate closed
accounts by inserting a line in both the Balance columns opposite the closing entry.
10. Prepare a post-closing trial balance.

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2. The following selected accounts and their current balances appear in the ledger of
Drapery Land Co. for the fiscal year ended July 31, 2010:
Cash $ 161,250 Sales Returns and Allowances $ 69,300
Accounts Receivable 363,000 Sales Discounts 65,700
Merchandise Inventory 525,000 Cost of Merchandise Sold 2,325,000
Office Supplies 16,800 Sales Salaries Expense 519,600
Prepaid Insurance 10,200 Advertising Expense 131,400
Office Equipment 255,000 Depreciation Expense—
Accumulated Depreciation— Store Equipment 19,200
Office Equipment 138,400 Miscellaneous Selling Expense 4,800
Store Equipment 759,000 Office Salaries Expense 252,450
Accumulated Depreciation— Rent Expense 94,050
Store Equipment 102,600 Depreciation Expense—
Accounts Payable 166,800 Office Equipment 38,100
Salaries Payable 7,200 Insurance Expense 11,700
Note Payable Office Supplies Expense 3,200
(final payment due 2020) 168,000 Miscellaneous Administrative Expense 5500
Tanya Xavier, Capital 1,312,250
Tanya Xavier, Drawing 105,000 Interest Expense 15,000
Sales 3,855,000
Instructions
1. Prepare a multiple-step income statement.
2. Prepare a statement of owner’s equity.
3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is
$16,800.
3. The cash account for Interactive Systems at February 28, 2010, indicated a balance of $7,635.
The bank statement indicated a balance of $13,333 on February 28, 2010. Comparing the bank
statement and the accompanying canceled checks and memos with the records reveal the
following reconciling items:
a. Checks outstanding totaled $4,118.
b. A deposit of $4,500, representing receipts of February 28, had been made too late to appear on
the bank statement.
c. The bank had collected $5,200 on a note left for collection. The face of the note was $5,000.
d. A check for $290 returned with the statement had been incorrectly recorded by Interactive
Systems as $920. The check was for the payment of an obligation to Busser Co. for the purchase
of office supplies on account.
e. A check drawn for $415 had been incorrectly charged by the bank as $145.
f. Bank service charges for February amounted to $20.
Instructions
1. Prepare bank reconciliation.
2. Journalize the necessary entries.

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