Chapter-1

Problem 1:

MD. ABDULLAH initiates his consulting business on July 31,2017. Throughout the inaugural month of
operations, the following transactions transpire:

1. MD. ABDULLAH contributes $15,000 in cash to launch the consulting practice.

2. Remits $1,200 for August rent for the office space.

3. Acquires office supplies on account totaling $2,500.

4. Renders consulting services to clients and receives $2,800 in cash.

5. Secures a $1,000 cash loan from a financial institution through a note payable.

6. Provides consulting services to a client on credit amounting to $1,500.

7. Settles monthly expenditures: wages and salaries $600. MD. ABDULLAH takes out $800 in cash
for personal use.

Instructions:

a. Prepare a tabular summary of the transactions.

b. Prepare the income statement, owner’s equity & balance sheet at July 31,2017for MD.
ABDULLAH.

(a)
MD. ABDULLAH
Summary of Transactions
For the month of July 31, 2017

Date Assets Liabilities + Owner's Equity Remark

Cash Accounts Supplies Equipme Notes Account Owner's

(+)/(-) Receivabl (+)/(-) nt (+)/(-) Payable Payable Equity
e (+)/(-) (+)/(-) (+)/(-)
08/01 + + Daniel invests
$15,000 $15,000 $15,000 cash
08/02 -$1,200 -$1,200 Pays $1,200 for
August rent
08/03 +$2,500 +$2,500 Purchases office
supplies on
account $2,500
08/04 +$2,800 +$2,800 Provides
consulting
services and
receives $2,800
 in cash
08/5 +$1,000 +$1,000 Takes out a
$1,000 cash loan
from a financial
institution
through a note
payable
08/6 +$1,500 +$1,500 Provides
consulting
services on credit
for $1,500
08/7 -$600 -$600 Pays monthly
expenses: wages,
utilities,
marketing
08/8 -$800 -$800 Daniel withdraws
$800 cash for
personal use
16200 1500 2500 1000 2500 16700

20200 20200

(b) MD. ABDULLAH

Income Statement
For the month of July 31, 2017
Particulars Details Total
Revenue
Legal Services Revenue $4300

Expenses
salary Expense $600
rent expense $1200
Net Expenses ($1800)
Net Income $2500

MD. ABDULLAH
Owner’s Equity Statement
For the month of July 31, 2017
 Beginning Owner's Capital
+ Investment $15,000
+ Net Income $2500
- Withdrawal ($800)
Ending Owner's Equity $16700

Assets
Cash $16200
Account Receivable $1500
Supply $2500
Total Assets 20200
Liabilities:
Notes Payable $1000
Account Payable $2500
Total Liabilities $3500
Owner's Equity
Ending Owner's Equity MD. ABDULLAH $16700
Balance sheet
Total liabilities + Owner’s equity
For the month of July 31, 2017 20200

Problem-2:

MD. ABDULLAH opens her law office on July 31, 2017. During the first month of operations, the
following transaction occurred:

1. MD. ABDULLAH invested $10,000 in cash in the law practice.

2. Paid $300 for July rent on office space.

3. Purchased office equipment on account $1000.

4. Provided legal services to clients for each cash $2000.

5. Borrowed $200 cash from a bank on a note payable.

6. Performed legal services for client on account $1200.

7. Paid monthly expenses: salaries & wages $1000, utilities $500, & advertising $200.
 8. MD. ABDULLAH withdraws $700 cash for personal use.

Instructions:

a. Prepare a tabular summary of the transactions.

b. Prepare the income statement, owner’s equity & balance sheet at July 31,2017for MD.
ABDULLAH.

Solve: (a)

MD. ABDULLAH

Summary of transaction

For the month of July 31, 2017

Date Assets = Liability + Owner’s Equity

Cash Office Note

Account Equipme Account Payable Capital Expens Revenu Withd
Receiva nt Payable e e raw
ble

Bal. b/d - - - - - - - - -

1 +1000 +10000
0

2 (300) (300)

3 +1000 +1000

4 +2000 +2000

5 +200 +200

6 +1200 +1200

7 (1000) (1000)

(500) (500)

(200) (200)

8 (700) (700)
 Total 9500 1200 1000 1000 200 10000 (2000) 3200 (700)

check 11700 11700

Solve: (b)

MD. ABDULLAH

Income Statement

For the month of July 31, 2017

Particulars Details ($) Total ($)

Revenues

Service Revenue(3000+1500) 3200

Less: Expenses

Rent Expenses 300

Salaries & wages Expenses 1000

Utilities Expenses 500

Advertising Expenses 200

Total Expanses (2000)

Net income 1200

MD. ABDULLAH

Owner’s Equity Statement

For the month of July 31, 2017

Particulars Details ($) Total ($)

Beginning owner’s capital

Add:
 Investment 10000

Net Income 1200

Less: 11200

Drawing (700)

Ending owner’s capital 10500

MD. ABDULLAH

Balance Sheet Statement

For the month of July 31, 2017

Particulars Details ($) Total ($)

Assets:

Cash 9500

Account Receivable 1200

Office Equipment 1000

Total Assets 11700

Liabilities & Owner’s Equity:

Liabilities:

Note Payable 200

Account Payable 1000

Total Liabilities 1200

Owner’s Equity:

Ending owner’s capital

Total Liabilities & Owner’s Equity 10500

11700

Chapter – 2
Problem-1:
MD. ABDULLAH opened the DESH LIMITED on September 1, 2012. During the first month of
operations, the following transactions occurred.

Sept. 1. MD. ABDULLAH invested $50,000 cash in the business.

2. The company paid $2,000 cash for store rent for September.

3. Purchased washers and dryers for $25,000 in cash .

4. Paid $1,500 for a one-year accident insurance policy.

10. Received a bill from the Daily News for advertising the opening of the laundromat $500.

20. MD. ABDULLAH withdrew $700 cash for personal use.

30. The company determined that cash receipts for laundry services for the month were $6,200.

Instructions:

(a) Journalize the September transactions. (Use J1 for the journal page number.)

(b) Open ledger accounts and post the September transactions.

(c) Prepare a trial balance at September 30, 2012.

Solve: (a)

DESH LIMITED

General Journal

Date Account title & Explanation Ref. Debit Credit

Sep. 1 Cash 50000

Owner’s Capital 50000

2 Rent Expenses 2000

Cash 2000

3 Equipment 25000

Cash 25000

4 Prepaid Insurance 1200

 Cash 1200

10 Advertising Expenses 500

Account payable 500

20 Owner’s drawing 700

Cash 700

30 Cash 6200

Service revenue 6200

Solve: (b)

DESH LIMITED

General Ledger

Cash

Date Explanation Ref. Debit Credit Balance

Sep. 1 Owner’s capital 50000 50000

2 Rent Expenses 2000 48000

3 Equipment 25000 23000

4 Prepaid Insurance 1200 21800

20 Owner’s drawing 700 21100

30 Service revenue 6200 27300

Prepaid Insurance

Date Explanation Ref. Debit Credit Balance

Sep. 4 Cash 1200 1200

Equipment
Date Explanation Ref. Debit Credit Balance

Sep. 3 Cash 25000 25000

Account payable

Date Explanation Ref. Debit Credit Balance

Sep. 10 Advertising Expenses 500 500

Owner’s capital

Date Explanation Ref. Debit Credit Balance

Sep. 1 Cash 50000 50000

Owner’s drawing

Date Explanation Ref. Debit Credit Balance

Sep. 20 Cash 700 700

Service revenue

Date Explanation Ref. Debit Credit Balance

Sep. 30 Cash 6200 6200

Advertising Expenses

Date Explanation Ref. Debit Credit Balance

 Sep. 1 Advertising Expenses 500 500

Account payable

Date Explanation Ref. Debit Credit Balance

Sep. 1 Account payable 500 500
Rent Expenses
Date Explanation Ref. Debit Credit Balance

Sep. 1 Cash 2000 2000

Solve: (c)

DESH LIMITED

Trial Balance

September 30, 2017

Account title Debit Credit

Cash 27300

Prepaid Insurance 1200

Equipment 25000

Account payable 500

Owner’s capital 50000

Owner’s drawing

Service revenue 700 6200

Advertising Expenses 500

Rent Expenses 2000

total 56700 56700

Problem-2:

MD. ABDULLAH opened the dental center on April 1, 2012. During the first month of operations, the
following transactions occurred.
April. 1. Invest $20000 cash in her business.

1. Hired a secretary receptionist at a salary of $1000 per week payable monthly.

2. Paid office rent for the month $1200.

3. Purchased dental supplies on account from Dazzle company $3000.

10. Provided dental services & billed insurance companies $2100.

11. Received $500 cash advance from Leah for an implant.

20. Received $1500 cash for services performance for Michal.

30. Paid secretary receptionist for the month $700.

30. Paid $1400 to Dazzle for account payable due.

Instructions:

(a) Journalize the September transactions.

(b) Open ledger accounts and post the September transactions.

(c) Prepare a trial balance at April 30, 2012.

Solve: (a)

MD. ABDULLAH

General Journal

Date Account title & Explanation Ref. Debit Credit

April. 1 Cash 20000

Owner’s Capital 20000

1 No entry – hire is not a financial transaction - -

2 Rent Expenses 1200

Cash 1200

3 Supplies 3000

Account payable 3000

10 Account receivable 2100

 Service revenue 2100

11 Cash 500

Unearned revenue 500

20 Cash 1500

Service revenue 1500

30 Salaries & wages Expenses 700

Cash 700

30 Account payable 1400

Cash 1400

Solve: (b)

MD. ABDULLAH

General Ledger

Cash

Date Explanation Ref. Debit Credit Balance

April. 1 Owner’s capital 20000 20000

2 Rent Expenses 1200 18800

11 Unearned revenue 500 19300

20 Service revenue 1500 20800

30 Salaries & wages Expenses 700 20100

30 Account payable 1400 18700

Supply

Date Explanation Ref. Debit Credit Balance

3 Account payable 3000 3000

 Account receivable

Date Explanation Ref. Debit Credit Balance

10 Service revenue 2100 2100

Rent Expenses

Date Explanation Ref. Debit Credit Balance

2 Cash 1200 1200

Owner’s capital

Date Explanation Ref. Debit Credit Balance

1 Cash 20000 20000

Account payable

Date Explanation Ref. Debit Credit Balance

3 Supply 3000 3000

30 Cash 1400 1600

Service revenue

Date Explanation Ref. Debit Credit Balance

10 Account receivable 2100 2100

20 Cash 1500 3600

Unearned Service revenue

Date Explanation Ref. Debit Credit Balance

11 Cash 500 500

Salaries & wages Expenses

Date Explanation Ref. Debit Credit Balance

30 Cash 700 700

Solve: (c)

MD. ABDULLAH
 Trial Balance

Account title Debit Credit

Cash 18700

Supplies 3000

Account receivable 2100

Account payable 1600

Owner’s capital 20000

Service revenue 3600

Unearned Service revenue 500

Salaries & wages Expenses 700

Rent Expenses 1200

total 25700 25700

Chapter – 3
Problem-1:

The adjusted trial balance columns of HASEM & BROTHERS Company’s worksheet for the year ended
December 31, 2012, are as follows.

Debit Credit

Cash 30,000 Accumulated Depreciation–– 35,000

Accounts Receivable 15,100 Notes Payable 20,000

Inventory 20,000 Accounts Payable 30,600

Prepaid Insurance 4,500 Owner’s Capital 50,000
Equipment 90,000
Sales Revenue 535,800
Owner’s Drawings 15,000
Interest Revenue 6,500
Sales Returns and
677,900
Allowances 3,700
Sales Discounts 5,000

Cost of Goods Sold 360,900

Freight-out 7,600

Advertising Expense 10,000

Salaries and Wages

Expense 70,000

Utilities Expense 25,000

Rent Expense 12,000

Depreciation Expense 4,000

Insurance Expense 3,500

Interest Expense 1,600

677,900

Instructions:

Prepare a multiple-step income statement for HASEM & BROTHERS Company.

Solve:

HASEM & BROTHERS Company

Income Statement

For the Year Ended December 31, 2012

Particulars Amounts($) Amounts($)

Sales revenues 535,800

Less:

Sales returns and allowances 3,700

Sales discounts 5,000 (8700)

Net sales 527,100

Less: (360,900)

Cost of goods sold

166,200
Gross profit

Less:

Operating expenses

Salaries and wages expense 70,000

Rent expense 12,000

Utilities expense 25,000

Advertising expense 10,000

Depreciation expense 4,000

Freight-out 7,600

Insurance expense 3,500 (132,100)

Total operating expenses 34100

Income from operations

Add:

Other revenues and gains

Interest revenue 6,500

Other expenses and losses (4,900)

Interest expense (1,600) 29200

Net income