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Chapter One Test Exercises

Problem 1: Ahmed invests $20,000 cash in a business. He purchases $6,000 of office equipment on credit and $2,400 of supplies for cash. He receives $3,000 cash from customers and bills $500 to a customer. He pays $1,000 in salaries, $500 in rent, and $300 in utilities in cash. He pays a $250 bill and receives $500 cash from a billed customer. He withdraws $2,700 cash for personal use. Problem 2: Alia invests $11,000 cash and pays $500 rent, $3,000 for equipment, and $1,500 in legal services on account. She borrows

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166 views2 pages

Chapter One Test Exercises

Problem 1: Ahmed invests $20,000 cash in a business. He purchases $6,000 of office equipment on credit and $2,400 of supplies for cash. He receives $3,000 cash from customers and bills $500 to a customer. He pays $1,000 in salaries, $500 in rent, and $300 in utilities in cash. He pays a $250 bill and receives $500 cash from a billed customer. He withdraws $2,700 cash for personal use. Problem 2: Alia invests $11,000 cash and pays $500 rent, $3,000 for equipment, and $1,500 in legal services on account. She borrows

Uploaded by

kaahiye cade
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PROBLEMS

Problem 1
1. On April 1, 2018, Ahmed invests $20,000 cash in the business.
2. On April 2, 2018, Ahmed purchases office equipment for $6,000 on credit.
3. Ahmed purchases for $2,400 from Star Supply Company computer paper and other supplies expected to
last several months on cash.
4. Ahmed receives $3,000 cash from customers for services he has provided.
5. Ahmed receives a bill for $250 from the KNN for advertising but postpones payment until a later date.
6. Ahmed provides $2,500 of services for customers. He receives cash of $2,000 from customers, and it bills
the balance of $500 on account.
7. Ahmed pays the following Expenses in cash for April: salaries of employees $1,000, house rent $500, and
utilities $300.
8. Ahmed pays its $250 KNN bill in cash.
9. Ahmed receives $500 in cash from customers who had been billed for services [in Transaction (6)].
10. Ahmed withdraws $2,700 in cash from the business for his personal use.
Instructions
a. Prepare a tabular summary of the transactions

Problem 2

Alia opens his own law office on October 1, 2016.


During the first month of operations, the following transactions occurred.
1. Alia invested $11,000 in cash in the law practice.
2. Paid $500 on cash for July rent on office space.
3. Purchased office equipment on cash $3,000.
4. Provided legal services to clients $1,500 on account.
5. Borrowed $700 cash from a bank on a note payable.
6. Performed legal services for client on cash $4,000.
7. Paid monthly expenses: salaries $500, utilities $300, and telephone $100.
8. Alia withdraws $2,000 cash for personal use.
Instructions
a. Prepare a tabular summary of the transactions

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Problem 3

Hassan opened a supermarket on January 1, 2019. During the first month of operations the following

transactions occurred.

1. Hassan invested $10,000 cash in the supermarket.

2. The company paid $900 cash for store rent for January.

3. Purchased supplies for $8,000, paying $5,000 in cash and signing a $3,000, 6-month, 12% note

payable.

4. Received a bill from the Simba News for advertising the opening of the supermarket $400 and paid it

in cash.

5. Hassan withdrew $500 cash for personal use.

6. The company determined that cash revenues received from the supermarket were $3,700

Instructions
a. Prepare a tabular summary of the transactions

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