Fo A I Assignment1

HARAMBEE UNIVERSITY
FBE, DEPARTMENT OF ACCOUNTING AND FINANCE

Fundamentals of Accounting I Group assignment for accounting 2nd year, b/administration
2nd year and Management 3rd year
N.B: Form group of 5 members Submission Date: 09/05/ 2016 E.C
Q1. Patrick Kellogg has prepared the following list of statements about the accounting cycle.
1. “Journalize the transactions” is the fi rst step in the accounting cycle.
2. Reversing entries are a required step in the accounting cycle.
3. Correcting entries do not have to be part of the accounting cycle.
4. If a worksheet is prepared, some steps of the accounting cycle are incorporated into the
worksheet.
5. The accounting cycle begins with the analysis of business transactions and ends with the
preparation of a post-closing trial balance.
6. All steps of the accounting cycle occur daily during the accounting period.
7. The step of “post to the ledger accounts” occurs before the step of “journalize the trans-
actions.”
8. Closing entries must be prepared before financial statements can be prepared.
Instructions
Identify each statement as true or false. If false, indicate how to correct the statement.
Q2. The following are the major statement of financial position classifications.
Intangible assets (IA) Equity (E)
Property, plant, and equipment (PPE) Non-current liabilities (NCL)
Long-term investments (LTI) Current liabilities (CL)
Current assets (CA)
Instructions
Classify each of the following accounts taken from Geraldo Company’s statement of financial
position.
______ Accounts payable ______ Accumulated depreciation
______ Accounts receivable ______ Buildings
______ Cash ______ Land
______ Share capital—ordinary ______ Long-term debt
______ Patents ______ Supplies
______ Salaries and wages payable ______ Equipment
______ Inventory ______ Prepaid expenses
Q3. Tom Brennan opened Brennan’s Cleaning Service on July 1, 2014. During July the
following transactions were completed.
July 1 Shareholders invested $20,000 cash in the business in exchange for ordinary shares.
1 Purchased used truck for $12,000, paying $4,000 cash and the balance on account.
3 Purchased cleaning supplies for $2,100 on account.
5 Paid $1,800 cash on one-year insurance policy effective July 1.
12 Billed customers $5,900 for cleaning services.
18 Paid $1,500 cash on amount owed on truck and $1,400 on amount owed on cleaning
supplies.
20 Paid $4,500 cash for employee salaries.
21 Collected $4,400 cash from customers billed on July 12.
25 Billed customers $8,000 for cleaning services.
31 Paid $350 for the monthly gasoline bill for the truck.
31 Declared and paid a $1,200 cash dividend.
The chart of accounts for Brennan’s Cleaning Service contains the following accounts:
No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 130 Prepaid Insurance,
No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts
Payable, No. 212 Salaries and Wages Payable, No. 311 Share Capital—Ordinary, No. 320
Retained Earnings, No. 332 Dividends, No. 350 Income Summary, No. 400 Service Revenue,
No. 633 Gasoline Expense, No. 631 Supplies Expense, No. 711 Depreciation Expense,
No. 722 Insurance Expense and No. 726 Salaries and Wages Expense.
Instructions
a. Journalize and post the July transactions. Use page J1 for the journal and the three-
column form of account.
b. Prepare a trial balance at July 31 on a worksheet.
c. Enter the following adjustments on the worksheet and complete the worksheet.
1. Services provided but unbilled and uncollected at July 31 were $3,300.
2. Depreciation on equipment for the month was $500.
3. One-twelfth of the insurance expired.
4. An inventory count shows $600 of cleaning supplies on hand at July 31.
5. Accrued but unpaid employee salaries were $2,200.
d. Prepare the income statement and retained earnings statement for July and a classified
statement of financial position at July 31.
e. Journalize and post adjusting entries. Use page J2 for the journal.
f. Journalize and post-closing entries and complete the closing process. Use page J3 for the
journal.
g. Prepare a post-closing trial balance at July 31.
Q4. A group of student investors in Hong Kong opened Campus Laundromat Inc. on September
1, 2014. During the first month of operations, the following transactions occurred.
Sept. 1 Shareholders invested HK$200,000 cash in the business in exchange for ordinary shares.
2 Paid HK$10,000 cash for store rent for the month of September.
3 Purchased washers and dryers for HK$250,000, paying HK$100,000 in cash and signing a
HK$150,000, 6-month, 12% note payable.
4 Paid HK$12,000 for a one-year accident insurance policy.
10 Received a bill from the Daily News for advertising the opening of the laundromat
HK$2,000.
20 Declared and paid a cash dividend to shareholders HK$7,000.
30 Determined that cash receipts for laundry fees for the month were HK$62,000.
Instructions
(a) Journalize the September transactions. (Use J1 for the journal page number.)
(b) Open ledger accounts and post the September transactions.
(c) Prepare a trial balance at September 30, 2014.
Q5. Write notes on “Accounting system”

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HARAMBEE UNIVERSITY

FBE, DEPARTMENT OF ACCOUNTING AND FINANCE

Q5. Write notes on “Accounting system”

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