Transaction

BEKA authorized accounting firm is a sole proprietorship owned by BEKA ABDETA and providing
accountancy services to its clients.

The account balance of the business as of November 1, 2015 is shown as follows:

Account Title Amount in birr

Cash 50,500

Account Receivable 25,000

Supplies 2,500

Office Equipment 15,000

Account Payable 5,000

Bieka, Capital 88,000

During the month of November 2015, the business has made the following transactions

Date Transaction occurred during the month

Nov. 02 Paid one year office rent of Br 24,000 for the business starting from November 1,2015

Nov. 12 provided accountancy service to ABC Co. for Br 15,000 on account

Nov. 15 Purchased stationary materials (supplies) for Br 2,500 on account

Nov. 16 Ato Bieka has withdrawn Br 2,600 for his personal consumption

Nov. 17 Provided accountancy service to Langano trading for Br 10,000 cash

Nov. 22 Paid salary of Br 13,500 for its employees

Nov. 28 Partially collected Br 12,000 from ABC Co. for the service rendered on Nov. 12

 Additional Information. Office supplies on hand at the end of the month worth Br 3,500

Required tasks:

Task 1.1 Pass journal entries for the above transactions

Task 1.2 Post the entries to T-accounts

Task 1.3 Prepare unadjusted trial balance on November 30, 2015

Task 1.4 Pass the adjusting entries and post them on November 30, 2015
Task 1.5 Prepare adjusted trial balance on November 30, 2015

Task 1.6 Prepare the income statement and balance sheet

Task 1.7 close nominal or temporary accounts by income summery to capital account

Tasks 1.8 prepare post-closing trial balance.

Answers

Task 1

Beakia accountancy service

journal entry

Nov 2015

Nov 2 prepaid rent………………………………………24,000

Cash……………………………………………………24,000

Nov 12 A/R . ………………………………………………..15000

Service revenue………………………………………15,000

Nov 15 supplies …………………………………………2,500

A/P………………………………………………………….2,500

NOV 16 Withdrawn…………………………………….2,600

Cash………………………………………………2,600

Nov 17 cash………………………………………………10,000

Service revenue……………………………………..10,000

Nov 22 salary expense ………………………..13,500

Cash ………………………………………..13,500

Nov 28 cash……………………………………………12,000

A/R…………………………………………12,000

Beaka accountancy service

Unadjusted trial balance

Nov 30
Description Dr CR

Cash ………………………………………………….32,400

A/R ………………………………………………………..28,000

Prepaid rent……………………………………………….24,000

Office equipment………………………………………15,000

Supplies…………………………………………………….5,000

A/P……………………………………………………………………………………………………………………7,500

Withdrawal ……………………………………….2,600

Service revenue…………………………………………………………………………………………………..25,000

Salary expenses…………………………………13,500

Capital ………………………………………………………………..……………………………………………….88,000

Total 120,500 120,500

Adjustment or adjusting entry’s

Rent expense= 24000 /12 =2,000

Rent expense……………………….2,000

Prepaid rent……………………………………2,000

Supplies used 5,000-3,500=1,500

Supplies expense…………………………………………….. 1,500

Supplies ………………………………………………………………………………1,500
 Beakia accountancy service

Adjusted trial balance

Nov 2015

Description Dr CR

Cash ………………………………………………….32,400

A/R ………………………………………………………..28,000

Prepaid rent……………………………………………….22,000

Office equipment………………………………………15,000

Supplies…………………………………………………….3,500

A/P……………………………………………………………………………………………………………………7,500

Withdrawal ……………………………………….2,600

Service revenue…………………………………………………………………………………………………..25,000

Salary expenses…………………………………13,500

Supplies expense ………………………………….1,500

Rent expense………………………………………..2,000

Capital ………………………………………………………………..……………………………………………….88,000

Total 120,500 120,500

Beaka accountancy service

Income statement

Nov 2015

Service revenue…………………………………………………………………………………………………..25,000

Less

Salary expenses…………………………………13,500

Supplies expense ………………………………….1,500

Rent expense………………………………………..2,000

Total expense ……………………………………………………………………………..(17,000)

Net income……………………………………………………………………………………………………………8,000

Beaka accountancy service

Statements of owner equity

Nov 2015

Bigning capital…………………………………………………………………..88,000

Add net income……………………………………………………………………..8000

Change in capital………………………………………………………………………..96,000

Less withdrawal …………………………………2,600

Ending capital………………………………………………………………………93,400

Beaka accountancy service

Balance sheet

Nov 2015

Assets liability

Cash……………………….32,400 A/P……………………….7,500

A/R ……………………………28,000 EQUITY

Prepaid rent……………….22,000 beaka capital …….93,400

Supplies ………………….3,500

Office equipment………15,000

Total assets 100,900 total liability and capital………. 100,900

  To close revenue account to income summery account

Service revenue………………………………………..25,000

Income summery………………………………………..25000

 To close expense account to income summery account

Income summery……………………………..17000

Salary expenses…………………………………13,500

Supplies expense ………………………………….1,500

Rent expense………………………………………..2,000

 To close income summery to cap0ital account

Income summery …………………………………8000

Capital………………………………………….8000

 To close withdrawals account to cap0ital account

Cap0ital……………………………………………………2600

Withdrawal ………………………..2600