Debre Markos University Burie Campus

Fundamentals of Accounting I Group Assignment for 2nd Year AcFn Students.

N.B: copying others work is strictly forbidden!!!
1. “Accounting is ingrained in our society and it is vital to our economic system.” Do you
agree? Explain.
2. Identify and describe the steps in the accounting process.
3. Why is it necessary to prepare formal financial statements if all of the data are in the
statement columns of the worksheet?
4. What is the role of international financial reporting standards (IFRS)?
5. At the beginning of the year, Gonzales Company SLU had total assets of br.870,000 and total
liabilities of br.500,000. Answer the following questions.
(a) If total assets increased br.150,000 during the year and total liabilities decreased
br.80,000, what is the amount of equity at the end of the year?
(b) During the year, total liabilities increased br.100,000 and equity decreased br.55,000.
What is the amount of total assets at the end of the year?
(c) If total assets decreased br.80,000 and equity increased br.120,000 during the year, what
is the amount of total liabilities at the end of the year?
6. This information is for Java Company Ltd. for the year ended December 31, 2017 (amounts
in thousands).
 Cash received from revenues from customers Br.600,000
 Cash received for issuance of ordinary shares 280,000
 Cash paid for new equipment 95,000
 Cash dividends paid 20,000
 Cash paid for expenses 430,000
 Cash balance 1/1/17 28,000
Instructions: Prepare the 2017 statement of cash flows for Java Company Ltd
7. Kinney’s Repair Ltd. was started on May 1. A summary of May transactions is presented below.
a. Shareholders invested br.10,000 cash in the business in exchange for ordinary shares.
b. Purchased equipment for br.5,000 cash.
c. Paid br.400 cash for May office rent.
d. Paid br.700 cash for supplies.
e. Incurred br.250 of advertising costs in the Beacon News on account.
f. Received br.4,700 in cash from customers for repair service.
g. Declared and paid a br.1,000 cash dividend.
h. Paid part-time employee salaries br.1,000.
i. Paid utility bills br.160.
j. Performed repair service worth br.980 on account.
k. Collected cash of br.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, Share Capital, and
Retained Earnings (with separate columns for Revenues, Expenses, and Dividends).
Include margin explanations for any changes in Retained Earnings. Revenue is called
Service Revenue.
(b) From an analysis of the Retained Earnings columns, compute the net income or net loss
for May.

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8. Matt Stiner started a delivery service, Stiner Deliveries Ltd., on June 1, 2017. The following
transactions occurred during the month of June.
 June 1 Shareholders invested br.10,000 cash in the business in exchange for ordinary shares.
 June 2 Purchased a used van for deliveries for br.14,000. Matt paid br.2,000 cash and
signed a note payable for the remaining balance.
 June 3 Paid br.500 for office rent for the month.
 June 5 Performed services worth br.4,800 on account.
 June 9 Declared and paid br.300 in cash dividends.
 June 12 Purchased supplies for br.150 on account.
 June 15 Received a cash payment of br.1,250 for services performed on June 5.
 June 17 Purchased gasoline for br.100 on account.
 June 20 Received a cash payment of br.1,500 for services performed.
 June 23 Made a cash payment of br.500 on the note payable.
 June 26 Paid br.250 for utilities.
 June 29 Paid for the gasoline purchased on account on June 17.
 June 30 Paid br.1,000 for employee salaries.
Instructions
a. Show the effects of the previous transactions on the accounting equation
b. Prepare an income statement for the month of June.
c. Prepare a statement of financial position at June 30, 2017
9. On December 1, 2017, Jurczyk Distributing Company, Ltd. had the following account balances.

During December, the company completed the following summary transactions.

 Dec. 6 Paid br.1,600 for salaries and wages due employees, of which br.600 is for
December and br.1,000 is for November salaries and wages payable.
 8 Received br.2,100 cash from customers in payment of account (no discount allowed).
 10 Sold merchandise for cash br.6,600. The cost of the merchandise sold was br.4,100.
 13 Purchased merchandise on account from Gong Co. br.9,000, terms 2/10, n/30.
 15 Purchased supplies for cash br.2,000.
 18 Sold merchandise on account br.12,000, terms 3/10, n/30. The cost of the
merchandise sold was br.8,400.
 20 Paid salaries and wages br.1,800.
 23 Paid Gong Co. in full, less discount.
 27 Received collections in full, less discounts, from customers billed on December 18.
Adjustment data:
1. Accrued salaries and wages payable br.800.
2. Depreciation br.200 per month.
3. Supplies on hand br.1,700.

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 Instructions
(a) Journalize the December transactions using a perpetual inventory system.
(b) Enter the December 1 balances in the ledger T-accounts and post the December transactions.
Use Cost of Goods Sold, Depreciation Expense, Salaries and Wages Expense, Sales Revenue,
Sales Discounts, and Supplies Expense.
(c) Journalize and post adjusting entries.
(d) Prepare an adjusted trial balance.
(e) Prepare an income statement and a retained earnings statement for December and a
classified statement of financial position at December 31.
10. At the beginning of the current season on April 1, the ledger of Oosthuizen Pro Shop, NV showed
Cash br.3,000; Inventory br.4,000; and Share Capital—Ordinary br.7,000.
The following transactions occurred during April 2017.
 Apr. 5 Purchased golf bags, clubs, and balls on account from Balata Co. br.1,300, FOB
shipping point, terms 2/10, n/60.
 7 Paid freight on Balata Co. purchases br.80.
 9 Received credit from Balata Co. for merchandise returned br.100.
 10 Sold merchandise on account to members br.710, terms n/30.
 12 Purchased golf shoes, sweaters, and other accessories on account from Arrow
Sportswear br.450, terms 1/10, n/30.
 14 Paid Balata Co. in full.
 17 Received credit from Arrow Sportswear for merchandise returned br.50.
 20 Made sales on account to members br.600, terms n/30.
 21 Paid Arrow Sportswear in full.
 27 Granted credit to members for clothing that had flaws br.55.
 30 Received payments on account from members br.590.
The chart of accounts for the pro shop includes Cash, Accounts Receivable, Inventory, Accounts
Payable, Share Capital—Ordinary, Sales Revenue, Sales Returns and Allowances, Purchases,
Purchase Returns and Allowances, Purchase Discounts, and Freight-In.
Instructions
A. Journalize the April transactions using a periodic inventory system.
B. Using T-accounts, enter the beginning balances in the ledger accounts and post the
April transactions.
C. Prepare a trial balance on April 30, 2017.
D. Prepare an income statement through gross profit, assuming merchandise inventory
on hand at April 30 is br.4,824.
11. Lerwick Store Ltd. is located in midtown Metropolis. During the past several years, net income has
been declining because of suburban shopping centers. At the end of the company’s fiscal year on
November 30, 2017, the following accounts appeared in two of its trial balances.

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 Instructions
(a) Prepare an income statement, a retained earnings statement, and a classified statement
of financial position. Notes payable are due in 2020.
(b) Journalize the adjusting entries that were made.
(c) Journalize the closing entries that are necessary
12. The trial balance of Mr. Rosiak Fashion Center, Ltd. contained the following accounts at
November 30, the end of the company’s fiscal year.

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Adjustment data:
1. Supplies on hand totaled br.2,100.
2. Depreciation is br.11,500 on the equipment.
3. Interest of br.4,000 is accrued on notes payable at November 30.
4. Inventory actually on hand is br.44,520.
Instructions
(a) Enter the trial balance on a worksheet, and complete the worksheet.
(b) Prepare an income statement and a retained earnings statement for the year, and a classified
statement of financial position as of November 30, 2017. Notes payable of br.6,000 are due in January
2018.
(c) Journalize the adjusting entries.
(d) Journalize the closing entries.
(e) Prepare a post-closing trial balance
13. On May 31, 2017, Terrell Ltd. had a cash balance per books of br.6,781.50. The bank
statement from Home Town Bank on that date showed a balance of br.6,824.60. A
comparison of the statement with the Cash account revealed the following facts.
A. The statement included a debit memo of br.60 for the printing of additional company checks.
B. Cash sales of br.836.15 on May 12 were deposited in the bank. The cash receipts
journal entry and the deposit slip were incorrectly made for br.886.15. The bank
credited Terrell Company for the correct amount.
C. Outstanding checks at May 31 totaled br.276.25. Deposits in transit were br.1,916.15.
D. On May 18, the company issued check No. 1181 for br.685 to Barry Dietz on account.
The check, which cleared the bank in May, was incorrectly journalized and posted by
Terrell for br.658.
E. A br.3,000 note receivable was collected by the bank for Terrell on May 31 plus br.80 interest.
The bank charged a collection fee of br.20. No interest has been accrued on the note.
F. Included with the cancelled checks was a check issued by Bridges plc to Jon Newton
for br.600 that was incorrectly charged to Terrell by the bank.
G. On May 31, the bank statement showed an NSF charge of br.640 for a check issued by
Sandy Grifton, a customer, to Terrell on account.
Instructions
(a) Prepare the bank reconciliation at May 31, 2017.
(b) Prepare the necessary adjusting entries for Terrell at May 31, 2017.
14. The ledger of J.C. Cobb Company at the end of the current year shows Accounts Receivable
br.150,000, Sales Revenue br.850,000, and Sales Returns and Allowances br.30,000.
Instructions
(a) If J.C. Cobb uses the direct write-off method to account for uncollectible accounts,
journalize the adjusting entry at December 31, assuming J.C. Cobb determines that M.
Jack’s br.1,500 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of br.2,400 in the trial balance,
journalize the adjusting entry at December 31, assuming bad debts are expected to be
(1) 1.5% of net sales, and (2) 10% of accounts receivable.
(c) ) If Allowance for Doubtful Accounts has a debit balance of br.200 in the trial balance,
journalize the adjusting entry at December 31, assuming bad debts are expected to be
(1) 0.75% of net sales and (2) 6% of accounts receivable

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