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Section 3
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Section 3

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Excerises on Chapter 3: Adjusting the acccounts

Excerises on Chapter 3: Adjusting the acccounts

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  • 1. "The only place where success comes before workis in dictionary"Vidal Sassoon
  • 2. No Cellphone
  • 3. Principles Of Accounting (1) Chapter 3 Adjusting the Accounts Mohamed Mahmoud mmahmoud@eelu.edu.eg Tel: (+202) 33318449
  • 4. Exercises
  • 5. 1.Trail Balance
  • 6. Exercise 1 Prepare journal entries for each of the following transactions. Performed services for customers on account $5,000. Purchased $20,000 of equipment on account. Received $3,000 from customers in transaction 1. The owner, Mohammad Obayd, withdrew $1,000 cash for personal use.
  • 7. a. Accounts Receivable.................................................................. 5,000 Service Revenue......................................................................... 5,000 Equipment................................................................................ 20,000 Accounts Payable......................................................................... 20,000 Cash .......................................................................................... 3,000 Accounts Receivable................................................................... 3,000 Mohamed, Drawings ..…………………………….…………………………….1,000 Cash……………………………………………….....………………………………………1,000
  • 8. Exercise 1 (Continued) The ledger account balances for Elnoory Company are listed below. Accounts Payable $ 8,000 Accounts Receivable 7,000 Cash 13,000 Elnoory, Capital 11,000 Elnoory, Drawing 4,000 Repair Revenue 40,000 Salaries Expense 25,000 Unearned Revenue 2,000 Utilities Expense 12,000 Instructions:- Prepare a trial balance in proper form for Elnoory at December 31, 2009.
  • 9. b. El-Noory Company Trial Balance December 31, 2009 Debit Credit Cash $13,000 Accounts Receivable 7,000 Accounts Payable $ 8,000 Unearned Revenue 2,000 Elnoory, Capital 11,000 Elnoory, Drawing 4,000 Repair Revenue 40,000 Salaries Expense 25,000 Utilities Expense 12,000 _______ $61,000 $61,000
  • 10. Exercise 2
  • 11. Answers Cash Account Receivable Supplies
  • 12. Answers (Continued) Accounts Payable Unearned Revenue Jane Kent, Capital
  • 13. Answers (Continued) Service Revenue Salaries Expense Rent Expense
  • 14. Answers (Continued) JANE KENT, CPA Trial Balance May 31, 2009 ___________________________ ___ ___________ DebitCredit Cash $25,800 Accounts Receivable 2,100 Supplies 2,500 Accounts Payable $ 1,500 Unearned Revenue 3,500 Jane Kent, Capital 25,000 Service Revenue 3,300 Salaries Expense 2,000 Rent Expense 900              $33,300$33,300
  • 15. 2.Adjusting Entries Deferrals Accruals 1.Prepaid Expenses.Expenses paid in cash and recorded as assets before they are used or consumed. 3. Accrued Revenues. Revenues earned but not yet received in cash or recorded. 4. Accrued Expenses. Expenses incurred but not yet paid in cash or recorded. 2. Unearned Revenues. Revenues received in cash and recorded as liabilities before they are earned.
  • 16. 2.Adjusting Entries (Continued)
  • 17. Exercise 3 Prepare adjusting entries for the following transactions. Omit explanations Depreciation on equipment is $800 for the accounting period. There was no beginning balance of supplies and purchased $500 of office supplies during the period. At the end of the period $80 of supplies were on hand. Prepaid rent had a $1,000 normal balance prior to adjustment. By year end $600 was unexpired.
  • 18. Answers Depreciation Expense...................................................................... 800 Accumulated Depreciation—Equipment.................................. 800 Supplies Expense ............................................................................ 420 Supplies .................................................................................. 420 ($500 – $80) Rent Expense................................................................................... 400 Prepaid Rent ........................................................................... 400 ($1,000 – $600)
  • 19. Exercise 3 (Continued) Hans Albert Enterprises purchased computer equipment on May 1, 2009 for $4,500. The company expects to use the equipment for 3 years. What adjusting journal entry should the company make at the end of each month if monthly financials are prepared (annual depreciation is $1,500)? What is the book value of the equipment at May 31, 2009?
  • 20. Answers Depreciation Expense ........................................................... 125 Accumulated Depreciation............................................... 125   2. Cost $4,500 Accumulated Depreciation (125) Book value$4,375
  • 21. Exercise 4 On January 1, Anita received a $9,000 cash retainer for legal services The full amount was credited to the liability account: Unearned Revenue. Assuming that the revenue is earned ratably over the 3-month period, what adjustingjournal entry should be made at January 31?
  • 22. Answer Fees earned per month= $9,000/3 = $3,000 Unearned Revenue.................................................. 3,000 Fees Earned..................................................................... 3,000

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