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Principles of Accounting

The document contains various practice questions related to accounting transactions and financial statements for multiple businesses. It includes calculations for assets, liabilities, owner's equity, and the preparation of income statements and balance sheets. The questions require tabular analyses and financial statement preparations based on given financial data.

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1 views

Principles of Accounting

The document contains various practice questions related to accounting transactions and financial statements for multiple businesses. It includes calculations for assets, liabilities, owner's equity, and the preparation of income statements and balance sheets. The questions require tabular analyses and financial statement preparations based on given financial data.

Uploaded by

tabrijali6
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Practice Questions

1. The following information has been collected from Bonolota & Company

Particulars Amount (TK.)


Accounts Receivable 1,10,000
Office Supplies 40,000
Insurance Expense 20,000
Salary Expense 40,000
Service Revenue 80,000
Expense Payable 10,000
Unearned Service Revenue 40,000
Office Furniture 50,000
Notes Payable 40,000
Owners Investment 60,000
Office Supplies Expense 20,000
Accounts Payable 45,000
Mortgage 65,000
Drawings 20,000
a) Determine the total amount of assets.
b) Calculate the total liabilities.
c) Calculate the ending owners’ equity.

2. Presented below is information related to the sole proprietorship of Alice Henning, attorney;

Particulars Amount (Dollar)


Legal service revenue _2024 $335,000
Total expense_2024 211,000
Assets, January 1,2024 96,000
Liabilities, January 1,2024 62,000
Assets, December 31,2024 168,000
Liabilities, December 31,2024 100,000
Drawings _2024 ?

Instructions
Prepare the 2024 owner’s equity statement for Alice Henning’s legal practice.

3. On May 1, 2024, Julie Agarwal established Agarwal’s Travel agency. The following
transactions were completed during the month;

May 1, Invested $ 15,000 cash to start the agency.

May 5, Paid $600 cash for May office rent.


May 6, purchased equipment for $3,000 cash.

May 8, Incurred $700 of advertising cost in the Financial Times, on account.

May 9, Paid $900 cash for office supplies.

May 12, Performed service worth $ 10,000; $3,000 cash is received from customer, and the
balance of $7,000 is billed to customers on account.

May 15, Withdraw $600 cash for personal use

May 20, Paid Financial Times $500 of the amount due in May 8.

May 25, Paid employees’ salaries $2,500

May 30, Received $4000in cash from customers who have previously been billed May 12.

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.

4. Judi Salem opened a law office on July 1, 2024. 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. Recognized revenue of $7,500 of which $3,000 is collected in cash and the balance is due in
September.

4. Purchased additional 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 $2,000 from Standard Federal Bank—money borrowed on a note payable.

8. Incurred utility expenses for month on account $270.


Instructions

(a) Prepare a tabular analysis of the August transactions beginning with July 31 balances. The
column headings should be as follows:

Cash + Accounts Receivable + Supplies + Equipment = Notes Payable + Accounts Payable +


Owner's Capital - Owner's Drawings + Revenues - Expenses.

(b) Prepare an income statement for August, an owner's equity statement for August, and a
balance sheet at August 31.

5. Trixie Mage started her own consulting firm, Matrix Consulting, on May 1, 2023. The
following transactions occurred during the month of May:

May 1. Trixie invested $7,000 cash in the business.

2. Paid $900 for office rent for the month.

3. Purchased $600 of supplies on account.

5. Paid $125 to advertise in the County News.

6. Received $4,000 cash for services performed.

7. Withdrew $1,000 cash for personal use.

8. Performed $5,400 of services on account.

9. Paid $2,500 for employee salaries.

10. Paid for the supplies purchased on account on May 3.

11. Received a cash payment of $4,000 for services performed on account on May 15.

12. Borrowed $5,000 from the bank on a note payable.

13. Purchased equipment for $4,200 on account.

14. Paid $275 for utilities.

Instructions
(a) Show the effects of the previous transactions on the accounting equation using the
following format.

Cash + Accounts Receivable + Supplies + Equipment = Notes Payable + Accounts


Payable + Owner's Capital - Owner's Drawings + Revenues - Expenses.

(b) Prepare an income statement for the month of May.


(c) Prepare a balance sheet at May 31, 2024.

6. Nisan Trade Corporation started business on January 1, 2014, with cash of Tk.
200,000 and equipment worth Tk. 50,000, financed through a loan of Tk. 50,000. During
January, the business had the following additional transactions:

Amount
Date Particulars
(Tk.)
Jan
Paid office rent for three months in advance 45,000
01
Jan
Paid office insurance premium for 1 year 24,000
01
Jan
Purchased office supplies in cash 20,000
10
Jan
Provided services and received cash 80,000
15
Jan
Purchased office supplies on account 10,000
20
Jan
Provided services on account 50,000
25
Jan
Paid halves in cash for office supplies bought on Jan 20 -
30
Jan
At month-end, 1 month's rent expired, to be recorded as rent expense -
31
Jan At month-end, 1 month's insurance expired, to be recorded as insurance
-
31 expense
Jan
Office supplies worth Tk. 18,000 remained at the end of the month -
31

Instructions:
(a)Determine the beginning balance of cash.
(b)Calculate the amount of rent expense, insurance expense, and office supplies expense.
(c) Prepare a tabular analysis of the above transactions.
7. Following balances are collected from the ledger of Johnson at the end of 31Decmber, 2023;

Particulars Amount (Tk.) Particulars Amount (Tk.)


Utility Expense 8,000 Insurance expense 12,000
Accounts receivable 30,000 Notes payable 40,000
Accounts payable 20,000 Unearned commission 10,000
Cash 30,000 Dividend receivable 25,000
Machine 50,000 Prepaid insurance 24,000
Property 120,000 Service revenue 70,000
Land 450,000 Drawings 6,000
Goodwill 80,000 Capital 60,000
Trademark 48,000 Salaries 8,000
Franchise 25,000 Investment 60,000
Maintenance expense 15,000 Salaries payable 10,000

Instructions;

a) Determine the total amount of Current Assets, Fixed Assets, and Intangible Assets.
b) Calculate Total liabilities.
c) Based on the above information calculate net profit or loss.

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