Q1 Below some of the terms we commonly use in Accounting.

It is required that you define

and illustrate these terms in such a way that a layman understands these terms properly.

a) Assets f) Contra Asset accounts k) Economic Entity Assumption

b) Expenses g) Contra Revenue Account l) Revenue Recognition Principle
c) Accrued Expenses h) Supplies m) Expense Recognition Principle
d) Accrued Revenue i) Accruals n) Deferrals
e) Adjusting Entries j) Transactions o) Unearned Revenue

Q2 Indicate whether each of the following items is an Asset (A), Liability (L), or part of
owner’s Equity (OE).

a) Accounts receivable b) Salaries and wages payable c) Equipment

d) Supplies e) Owner’s capital f) Notes payable
g) Prepaid Expense h) Unearned service revenue i) Drawing

Q3 Financial information about four different companies is as follows.

Instructions: (a) Determine the missing amounts.

Q4 The following accounts are taken from the ledger of Angulo Company at December 31,
2012.
 Notes Payable $20,000 Cash $ 6,000
Owner’s Capital 28,000 Supplies 6,000
Equipment 80,000 Supplies Expense 4,000
Owner’s Drawings 8,000 Salaries Payable 3,000
Salaries Expense 38,000 Accounts Payable 11,000
Service Revenue 88,000 Accounts Receivable 8,000

Prepare a trial balance in good form.

Q5 The trial balance of the Kellen Davis Company shown below does not balance.

KELLEN DAVIS COMPANY

Trial Balance
May 31, 2012

Your review of the ledger reveals that each account has a normal balance. You also discover the
following errors.

1. The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Insurance Expense
were each understated $100.
2. Transposition errors were made in Accounts Receivable and Service Revenue. Based on
postings made, the correct balances were $2,570 and $6,960, respectively.
3. A debit posting to Salaries and Wages Expense of $200 was omitted.
4. A $1,000 cash drawing by the owner was debited to Owner’s Capital for $1,000 and credited
to Cash for $1,000.
5. A $520 purchase of supplies on account was debited to Equipment for $520 and credited to
Cash for $520.
6. A cash payment of $540 for advertising was debited to Advertising Expense for $54 and
credited to Cash for $54.
7. A collection from a customer for $210 was debited to Cash for $210 and credited to Accounts
Payable for $210.

Instructions
Prepare a correct trial balance. Note that the chart of accounts includes the following: Owner’s
Drawings and Supplies.
Q6. On September 1, 2012, the account balances of Moore Equipment Repair were as follows.

During September, the following summary transactions were completed.

Sept. 8 Paid $1,400 for salaries due employees, of which $900 is for September.

10 Received $1,200 cash from customers on account.

12 Received $3,400 cash for services performed in September.

15 Purchased store equipment on account $3,000.

17 Purchased supplies on account $1,200.

20 Paid creditors $4,500 on account.

22 Paid September rent $500.

25 Paid salaries $1,250.

27 Performed services on account and billed customers for services provided $2,100.

29 Received $650 from customers for future service.

Adjustment data consist of: 1. Supplies on hand $1,300. 2. Accrued salaries payable $300. 3.
Depreciation is $100 per month. 4. Unearned service revenue of $1,450 is earned.

Instructions:

(a) Journalize the September transactions.

(b) Enter the Ist September data in the ledger and post the September transactions

(c) Prepare a trial balance at September 30.

(d) Journalize and post adjusting entries.

(e) Prepare an adjusted trial balance.

(f) Prepare an income statement and an owner’s equity statement for September and a balance
sheet at September 30.