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Assignment One

Mr. Blue established Blue Accounting Firm on January 1st, 2020 to provide accounting services. Over the month there were cash deposits and withdrawals from clients and the bank. Expenses were also incurred for supplies, advertising, salaries and rent. By the end of January, the accounting firm had assets of cash, equipment, supplies and a copy machine, as well as liabilities in the form of accounts payable and a bank loan.

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Kirubel Fantu
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63 views

Assignment One

Mr. Blue established Blue Accounting Firm on January 1st, 2020 to provide accounting services. Over the month there were cash deposits and withdrawals from clients and the bank. Expenses were also incurred for supplies, advertising, salaries and rent. By the end of January, the accounting firm had assets of cash, equipment, supplies and a copy machine, as well as liabilities in the form of accounts payable and a bank loan.

Uploaded by

Kirubel Fantu
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. On Jan.1, 2020, Mr. Blue, established his own financial firm.

He named his business "Blue Accounting


Firm". The objective of the business is to render Accounting services including the preparation of
financial statements to clients on a fee basis. The following transactions occurred during the first month
of operation.
1) Jan.1: Blue deposited birr 20,000 cash in a bank account in the name of his business- Blue Accounting Firm.
2) Jan.4: Blue transferred equipment worth birr 30,000 from his home for office uses by Blue Accounting firm.
3) Jan.7: Blue accounting firm purchased office supplies worth birr 5,000 from different suppliers agreeing to
pay the sum within three weeks.
4) Jan.8: Blue paid Birr 3,000 cash for advertising its services.
5) Jan.9: Blue received Birr 20,000 cash for accounting service it rendered to cash clients.
6) Jan.11: Blue purchased a copy machine for business purposes. The business paid birr 28,000 cash for the
copy machine.
7) Jan.15: Blue received birr 10,000 additional cash investment from its owner.
8) Jan.16: Blue rendered Accounting service worth Birr 15,000 to clients who promised to pay the sum within
the coming ten days.
9) Jan.21: Blue paid Birr 4,000 cash to suppliers for its credit purchase of office supplies on Jan.7.
10) Jan.21: Blue borrowed Birr 14,000 cash from Commercial Bank of Ethiopia. The loan is repayable over six
months.
11) Jan.25: Blue collected Birr 12,000 from its credit customers.
12) Jan.27: Blue incurred and paid for the following expenses. Salary Birr 6,000, Rent Birr 4,500, Utilities Birr
1,200, and other expenses Birr 800.
13) Jan.30: Blue paid Birr 450 cash to Commercial bank of Ethiopia consisting of Birr 400 principal payment
and Birr 50 one month interest on part of the loan due in January.
14) Jan.31: Blue firm paid its owner birr 5,000 cash for his personal uses.
15) Jan.31: Blue determined that cost of office supplies remained on hand at the end of the month is Birr 1,300.
Required: Analyze and record the transaction by using the accounting equation based on the given chart of
accounts.
Blue Accounting Firm

Asset = Liability + Owners Equity

Cash Equipment Office Supplies Copy Machine Acct Receivable = Acct Payable Bank Loan Blue Capital
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On Warren (Text Book)


Chapter One Pages
Ex 1-12 32
PR 1-5A 38

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