Question set-1: Theory

1. What is accounting?
2. What is financial accounting?
3. Users of accounting information.
4. Basic accounting equation.
5. Golden rules of accounting.
6. Debit, credit, Debit and credit procedure, journal, journalizing, ledger, trial balance.

Question set-2: Tubular analysis (Math)

Page-39:
P1-1A Barone’s Repair Shop was started on May 1 by Nancy Barone. A summary of May
transactions is presented below.
1. Invested $10,000 cash to start the repair shop.
2. Purchased equipment for $5,000 cash.
3. Paid $400 cash for May office rent.
4. Paid $500 cash for supplies.
5. Incurred $250 of advertising costs in the Beacon News on account.
6. Received $5,100 in cash from customers for repair service.
7. Withdrew $1,000 cash for personal use.
8. Paid part-time employee salaries $2,000.
9. Paid utility bills $140.
10. Provided repair service on account to customers $750.
11. Collected cash of $120 for services billed in transaction (10).
Instructions
(a) Prepare a tabular analysis of the transactions, using the following column headings: Cash,
Accounts Receivable, Supplies, Equipment, Accounts Payable, Owner’s Capital, Owner’s
Drawings, Revenues, and Expenses.
(b) From an analysis of the owner’s equity columns, compute the net income or net loss for
May.

P1-2A Maria Gonzalez opened a veterinary business in Nashville, Tennessee, on August 1. On

August 31, the balance sheet showed Cash $9,000, Accounts Receivable $1,700, Supplies $600,
Equipment $6,000, Accounts Payable $3,600, and Owner’s Capital $13,700. During September,
the following transactions occurred.
1. Paid $2,900 cash on accounts payable.
2. Collected $1,300 of accounts receivable.
3. Purchased additional office equipment for $2,100, paying $800 in cash and the balance on
account.
4. Earned revenue of $8,000, of which $2,500 is received in cash and the balance is due in
October.
5. Withdrew $1,000 cash for personal use.
6. Paid salaries $1,700, rent for September $900, and advertising expense $450.
7. Incurred utilities expense for month on account $170.
8. Received $10,000 from Capital Bank (money borrowed on a note payable.
Instructions
(a) Prepare a tabular analysis of the September transactions beginning with August 31 balances.
The column headings should be as follows: Cash 1 Accounts Receivable 1 Supplies 1
Equipment 5 Notes Payable 1 Accounts Payable 1 Owner’s Capital 2 Owner’s Drawings 1
Revenues 2 Expenses.
(b) Prepare an income statement for September, an owner’s equity statement for September,
and a balance sheet at September 30.

Page-41
P1-2B Jenny Brown opened a law office, on July 1, 2010. On July 31, the balance sheet showed
Cash $5,000, Accounts Receivable $1,500, Supplies $500, Equipment $6,000, Accounts Payable
$4,200, and Owner’s Capital $8,800. During August, the following transactions occurred.
1. Collected $1,200 of accounts receivable.
2. Paid $2,800 cash on accounts payable.
3. Earned revenue of $8,000 of which $3,000 is collected in cash and the balance is due in
September.
4. Purchased additional office equipment for $2,000, paying $400 in cash and the balance on
account.
5. Paid salaries $2,500, rent for August $900, and advertising expenses $400.
6. Withdrew $700 in cash for personal use.
7. Received $1,500 from Standard Federal Bank—money borrowed on a note payable.
8. Incurred utility expenses for month on account $220.
Instructions
(a) Prepare a tabular analysis of the August transactions beginning with July 31 balances.
The column headings should be as follows: Cash 1 Accounts Receivable 1 Supplies 1
Equipment 5 Notes Payable 1 Accounts Payable 1 Owner’s Capital 2 Owner’s Drawings 1
Revenues 2 Expenses.
(b) Prepare an income statement for August, an owner’s equity statement for August, and a
balance sheet at August 31.
Question set-3: Journal, Ledger, Trial Balance (Math)

Page-83
P2-1A Frontier Park was started on April 1 by C.J. Mendez. The following selected events and
transactions occurred during April.
Apr.
1 Mendez invested $40,000 cash in the business.
4 Purchased land costing $30,000 for cash.
8 Incurred advertising expense of $1,800 on account.
11 Paid salaries to employees $1,500.
12 Hired park manager at a salary of $4,000 per month, effective May 1.
13 Paid $1,500 cash for a one-year insurance policy.
17 Withdrew $1,000 cash for personal use.
20 Received 5,700 in cash for admission fees.
25 Sold 100 coupon books for $25 each. Each book contains 10 coupons that entitle the
holder to one admission to the park.
30 Received $8,900 in cash admission fees.
30 Paid $900 on balance owed for advertising incurred on April 8.
Mendez uses the following accounts: Cash, Prepaid Insurance, Land, Accounts Payable,
Unearned Service Revenue, Owner’s Capital, Owner’s Drawings, Service Revenue, Advertising
Expense, and Salaries and Wages Expense.
Instructions
Journalize the April transactions.

P2-2A Jane Kent is a licensed CPA. During the first month of operations of her business, the
following events and transactions occurred.
May
1 Clark invested $20,000 cash in her business.
2 Hired a secretary-receptionist at a salary of $2,000 per month.
3 Purchased $2,500 of supplies on account from Read Supply Company.
7 Paid office rent of $900 cash for the month.
11 Completed a tax assignment and billed client $2,100 for services provided.
12 Received $3,500 advance on a management consulting engagement.
17 Received cash of $1,200 for services completed for C. Desmond Co.
31 Paid secretary-receptionist $2,000 salary for the month.
31 Paid 40% of balance due Read Supply Company.
Desiree uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No.
126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner’s
Capital, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent
Expense.
Instructions
(a) Journalize the transactions.
(b) Post to the ledger accounts.
(c) Prepare a trial balance on May 31, 2012.
Page-86

P2-2B Maria Juarez is a licensed dentist. During the first month of the operation of her
business, the following events and transactions occurred.
April
1 Invested $40,000 cash in her business.
1 Hired a secretary-receptionist at a salary of $600 per week payable monthly.
2 Paid office rent for the month $1,000.
3 Purchased dental supplies on account from Smile Company $4,000.
10 Provided dental services and billed insurance companies $5,100.
11 Received $1,000 cash advance from Trudy Borke for an implant.
20 Received $2,100 cash for services completed and delivered to John Carl.
30 Paid secretary-receptionist for the month $2,400.
30 Paid $1,600 to Smile Company for accounts payable due.
Victoria uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No.
126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner’s
Capital, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent
Expense.
Instructions
(a) Journalize the transactions.
(b) Post to the ledger accounts.
(c) Prepare a trial balance on April 30, 2012.
Question set-4: Adjusting Entry (Theory + Math)
Page-128:

E3-6 Affleck Company accumulates the following adjustment data at December 31.
1. Services provided but not recorded total $750.
2. Supplies of $300 have been used.
3. Utility expenses of $225 are unpaid.
4. Unearned service revenue of $260 has been earned.
5. Salaries of $900 are unpaid.
6. Prepaid insurance totaling $350 has expired.
Instructions
For each of the above items indicate the following.
(a) The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued
expense).
(b) The status of accounts before adjustment (overstatement or understatement).

E3-7 The ledger of Piper Rental Agency on March 31 of the current year includes the
selected accounts, shown on the next page, before adjusting entries have been prepared.

An analysis of the accounts shows the following.

1. The equipment depreciates $400 per month.
2. One-third of the unearned rent revenue was earned during the quarter.
3. Interest of $500 is accrued on the notes payable.
4. Supplies on hand total $700.
5. Insurance expires at the rate of $200 per month.
Instructions
Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly.
Additional accounts are: Depreciation Expense, Insurance Expense, Interest Payable,
and Supplies Expense.
Page-129:

E3-8 Andy Wright, D.D.S., opened a dental practice on January 1, 2010. During the first
month of operations, the following transactions occurred.
1. Performed services for patients who had dental plan insurance. At January 31, $875 of such
services was earned but not yet recorded.
2. Utility expenses incurred but not paid prior to January 31 totaled $520.
3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a
$60,000, 3-year note payable. The equipment depreciates $400 per month. Interest is $500 per
month.
4. Purchased a one-year malpractice insurance policy on January 1 for $12,000.
5. Purchased $1,600 of dental supplies. On January 31, determined that $400 of supplies were
on
hand.
Instructions
Prepare the adjusting entries on January 31. Account titles are: Accumulated Depreciation—
Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense,
Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities
Expense, and Utilities Payable.
Question set-5: Financial Statement (Math)
Page-179:

E4-1 The trial balance columns of the worksheet for Brisco Company at June 30, 2010, are as
follows.

Other data:
1. A physical count reveals $300 of supplies on hand.
2. $100 of the unearned revenue is still unearned at month-end.
3. Accrued salaries are $280.
Instructions:
Prepare Income Statement, Owners Equity Statement and Balance Sheet.

Page-185:
P4-1A Thomas Magnum began operations as a private investigator on January 1, 2010. The trial
balance columns of the worksheet for Thomas Magnum, P.I. at March 31 are as follows.
Other data:
1. Supplies on hand total $380.
2. Depreciation is $1,000 per quarter.
3. Interest accrued on 6-month note payable, issued January 1, $300.
4. Insurance expires at the rate of $200 per month.
5. Services provided but unbilled at March 31 total $530.
Instructions
Prepare Income Statement, Owners Equity Statement and Balance Sheet.

Page-189:
P4-1B The trial balance columns of the worksheet for SASSE Roofing at March 31, 2012, are
as follows.

Other data:
1. A physical count reveals only $650 of roofing supplies on hand.
2. Depreciation for March is $250.
3. Unearned revenue amounted to $170 at March 31.
4. Accrued salaries are $600.
Instructions
Prepare Income Statement, Owners Equity Statement and Balance Sheet.

Question set-6: short note overall.