Bram Wear Case

Dire Dawa University
College of business and Economic

Department of Accounting and finance
Work sheet on principle of Accounting I Ch1
1. Fantastic company had the following amounts of assets and liabilities at the beginning and
end of last year:
Assets Liabilities
Beginning of the year………………Br.75, 000 Br. 30,000
End of the year….……………………120,000 46,000
Determine the net income or net loss of Fantastic for the year under each of the following
unrelated assumptions:
a) Owner made no additional investment and withdrew no amount during the year
b) Owner made no additional investment but withdrew Br.17,500 to pay for her personal
expenses
c) Owner withdrew no amount during the year but made additional investment of Br.
32,500 cash.
d) Owner withdrew Br.17, 500 and invested Br.25, 000 cash during the year.
2. Describe how the following business transactions affect the three elements of the
Accounting equation.
a. Received cash for services performed.
b. Invested cash in business.
c. Paid for utilities used in the business.
d. Purchased supplies on account.
e. Purchased supplies for cash.
3. Gobeze is the owner and operator of Surprise motivational consulting business.
At the end of its accounting period, December 31, 2005, Surprise has assets of Br475, 000
And liabilities of Br200, 000. Using the accounting equation and considering each case
Independently, determine the following amounts:
A. Gobeze’s capital, as of December 31, 2005.
B. Gobeze’s capital, as of December 31, 2006, assuming that assets increased by
Br75,000 and liabilities increased by Br40,000 during 2006.
C. Gobeze’s capital, as of December 31, 2006, assuming that assets decreased by
Br15,000 and liabilities increased by Br27,000 during 2006.
D. Gobeze’s capital as of December 31, 2006, assuming that assets increased by
Br125,000 and liabilities decreased by Br65,000 during 2006.
E. Net income (or net loss) during 2006, assuming that as of December 31, 2006,
Assets were Br425,000, liabilities were Br105,000, and there were no additional
Investments or withdrawals.
4. Mimi started a new business called Omo Company and completed the following
transactions during November:
Nov.1 Mimi transferred 56,000 out of a personal savings bank account to a checking account in
the name of the business.
2. Rented office space and paid cash for the month’s rent of 800
3. Purchased electrical equipment for 14,000 by paying 3,200 and agreeing to pay the
remaining balance in six months
1|Page
4. Purchased office supplies by paying 900 cash.
5. Completed electrical work and received 1,000 cash for doing the work.
6. Purchased 3,800 of office equipment on credit
7. Completed electrical work on credit in the amount of 4,000
8. Paid for the office equipment purchased on Nov.9
9. Billed a customer for electrical work completed 600
10. Received 4,000 for the work completed on Nov.15
11. Paid salary of employees 1,200
12. Paid the monthly utilities bill 440
13. Withdrew 700 from the business for personal use
Required:
1. Arrange the following asset, liability and owner’s equity titles in a table just like illustrated in
chapter one: Cash, Accounts Receivable, Office Supplies, Office Equipment, Electrical
Equipment, Accounts Payable and Mimi Capital.
2. Use additions and subtractions to show the effect of each transaction on the items in the
equation. Show new totals after each transaction. Next to each change in owners equity state
whether the change was caused by an investment, revenue, expense or withdrawal.
3. Prepare an income statement, a statement of owner’s equity, and a balance sheet as of
November 30
Q5. Tirat Laundry Service is owned and operated by Girma Moges. A building and equipment
are currently being rented, pending expansion to new facilities. The assets and the liabilities of
the business on October 1, 2017, are as follows: Cash, Br 8,600; Accounts Receivable, Br 9,500;
Supplies, Br 1,200; Land, Br 20,000; Accounts Payable, Br 4,100.The following selected
transactions were completed by Tirat Laundry Service during October:
1) Received cash from the owner as additional investment, Br 35,000.
2) Purchased cleaning supplies on account, Br 2,950.
3) Received cash for providing cleaning services, Br 15,000.
4) Paid creditors on account, Br 1,800.
5) Billed customers for cleaning services on account, Br 11,250.
6) Purchased cleaning supplies for cash, Br 1,400.
7) Paid the following expenses for October: Rent expense, Br 3,400; Wages expense, Br
1,580; Utilities expense, Br 960; Advertising expense, Br 750; Miscellaneous expense, Br
630.
8) Received cash from customers on account, Br 6,740.
9) Determined that the cost of cleaning supplies on hand was Br 1,100; therefore, Br 3,300
of cleaning supplies had been used during the month.
10) Paid cash to owner for personal use, Br 1,000.
Required:
1. Indicate the effect of each transaction and the balances after each transaction,
using the basic accounting equation(Assets = Liabilities + Owner’s Equity
2. Prepare
a) an income statement for the month ended October 31, 2017.
b) a statement of owner’s equity for the month ended October 31, 2017.
c) a balance sheet as of October 31, 2017.
2|Page

Bram Wear Case

Uploaded by

Copyright:

Available Formats

Bram Wear Case

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bram Wear Case

Uploaded by

Copyright:

Available Formats

Dire Dawa University

College of business and Economic

You might also like