Review Questions Tabular Summary

8/8/2019 Review Questions Tabular Summary

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-,

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Exercise: .1 Fill in theblanksor the ottowingaccountingquations

A. Ah SengCo. has$100,000n assets ndnoliabilities'

ASSETE = LIABILITIES + OWNER'S EQUITY

B . RahmanPaintCo. has$60,000 n equipmentandowes he bank

$30,000n loans.

ASSETS = UABII.JTIES + OWNER'S EQUITY

C. JurongEnterpriseshas and andabuilding worth $120'000and

$60,000n owners'equitY'ASSETS = LIABILITIES + OWNER'S EQUITY

D. P.C. Co. has$300'000n assets nd$250'000n liabilities'_

NSiNTS = LIABITITIES + OWNER'S EQUITY

has $?5O000 n equipmentandno debt'

LIABILITIES + OWNER'S EQUITY

14,000

l-

=-

I"

=-

a-

tt

f.-

SpeedyCo.ASSETS =

+

r-

l-

=

t

Exercise-.,JThefollowing balancesareextractedrom thebooksof Sallyasat 3l Dec'

I-andandBuilding $60'000 Loan from Bank

Crediton 14,000 StocksDebtors 10,000 PrePaidexPenses

Motor vehicles 20,000 UnPaid bills

CaPital

5,000

5,0002,000

,

a) CalculateTotal assets

b) Calculatehetotal liabilities -c) CalculatehecaPital. -'

Exercise 1-9: ABC companyhadthefollowing transactionsn July:

%-Gght morefumiture cnsting$t0,000-oncash erns'

ibt Coltteo $8,000of outstanding ebts rom customers'

(c) Paid$5,200tocreditors'

idi Bonowed another$15,000 rom thgbg{<-

i;iShareholdersnjected urthercapitalof $5'ff)0 in cash'

BCSCjrTd:. ecord heeffectsof above ransactionson theaccountingequationbelow

r

b

Cash + Fumitu;T-Debtors = Overdraft

l July: 29,500 12'000 58,fl)0 - 20'fi)0

(a)

Assets$) Liabilities f$). + Equitv6)+ Creditors + CaPital

25,M 55,000f-

l-

(b)

l-

b

b

MDIS-PCBMFtciptes of ec"ouotittg&Finance



I

c).

d)

(

(

Total . . . . = . .

Exercise1.4: XYZ C-ompany ad hefollowing transactionsor monthof June:

.. TINIT I:ACCOUNTING EOUATION AND RULES OFDO{JBLE ENTRY

Purchases ffice ftrniture for $400paid in cashReceived ash$2,0{X) rorndebtors.Paidcreditors$1,2fi) in cashRepaid oansof $3,fi)0

Boughta van for $10,fi)0, paid n cash$4,0m and hebalanceobepaid

n July-The ownerbrought n cashof $5,000asadditional capitalSoldold office fumiture (atcost) for $5fi) cash.Theowner withdrew $3&) forpereonal use

Req |i$d: Record *re effectsof above ransactionson theaccountingequationbelow

Assqh $) = Liabilities $) Equity($)Cash+Debtors + Fumiture +Van = Loan + Creditors + Capital

I Juns 12,000 8,m 10,000 25,000= 15,000 5,000 35,000

Exercise ll.

Amer startsa companycalledAmer

Reesarchers.During the lst mongh.

July the companyhadthe following transactions:-

l. Amerstartsa Companyandputs n $25,000cash(capital) nto the Co. -

2. Co.purchasesn credit, stationery osting$350.

3. Amer Researchersala cash$2O000 o prnchases pieceof lanil

4. Amer Researches oes esearchor a customer& receivescash$1,900.

(a)

(b)

(c)

(d)

(e)

(0(e)(h)

(a'l

MDIS-FCBM t-7 PrinciplesofAccounting & Finance



l-

5. Amer Researches ays$100on the accountpayablet createdn

transaction2.

6. Amer takes $2,000fromhis own personalsavings o buy aTV for his house'

7_AmerResearchers ayscashexPensesor office rent ($400)andutilities ($lu))

8. TheCo. sellsat costa smallpieceof the and for $5,000

9. TheCo.paysAmer acashdividendof $1200'

Required:

Listthe3lJulybalancesofassets'liabilitiesandequityasshownabove.

Recordeffectsof eachof the9 transactionson theaccountingequation-

How muchdid the Co.made? =

J

JJ

:J

J

J

J

J

J

-.

Cash Stationery Land

I

'|

3

4)

6

I

9

Bal.

25r45O

= @rUlic+t Sh:ddders-Equt9

Account$PaYable Capital Retained

Profits

251450

J

-J

:

MDIS.PCtsM 1-8 Pdnciplesof Accounting& Finance





Exercisg 1.7ffffiopens a medicalclinic. During thefint monthof operationsn Januaryherclinic entitledAtrn Gm

Clinichad hefollowingevents.

Dr. Ganstarrsamedical clinic by investing $20,000 capital) n the clinic.

The business aid cash or landcosting 15,fiD. Ganplans o buildan

office building on the and-

The business urchasedmedicalsupplies rom UniqueSuppliers

for $2,000on account(credil).GanClinic officially opened or business.

During therestof themonth,Gan reatedpatientsandeamedservice

r"n"n*(Sules) of $8,0fi), receivingcash or half the salesmade'

Thebusiness aid cashexpenses; mployee alaries,$1,400;oflice rent,

$1,Ofi);utilities,$300.

The business oldat cost$500of medicalsupplies o anotherdoctor.The business orrowed $t0'000 from abank.

Thebusinessaid$1,500 o Uniquesuppliers.

Repuired:]l-lllnalyre theeffecrsof theseeventson theaccountingequationbelow

Z. Aftei completing lretable,answer hesequestionsabout hebusiness.

a. Hbw muchdoes hebusiness lryect o collect from patients?

b. How muchdoes hebusiness we n total'

c. How muchnetprofit or net ossdid the businessexperience uring its first monthof operatim?

d. How muchas otal asseB?

I

t!

,fl

l!

I

t

Jl!

ffi-.

28303l

= Ljabilities

Accounts

= Pavable

Aqsets

Date Accounts Medical

Jan. Cash Rec'able Supplies Land

6 Jan9

12

l5r5-31

15-31

6

I

12

15

15-31

15-31

28

30

31

35,800 35,800

MDIS-PCBM l-10 Principtesof Accounting& Finance

F

f



UNTTI:ACCOUNTING EOUATION AND RLJLESOFDOIIF .LEENTRY

Exef,cise 1.8Reliable ;td is asmall accounting rm. The following transactionsook

placeduringthemonth of January.

(l) Reeeived apital njection of $l$,000 in eash rom own€ffi(2) Paid$50,000cash or land(3) Bought$20,fi)0 office furniture on credit(4) Received$5,0ffi cash rom a customeror accountingservices endered

(5) Performedaccountingservices or customers n account credit)$10'000(6) Paid casbexpanses:ent$2,0(X), alaries$1,500,utilities $5fi)(7) Paid$4,000 n the accountpayablecreatedn Transaction3

(8) Received$1,(XX) n the account cceivablecreatedn Transaction5

(9) Sold and for cashat its costof $22,0fi)(10) Companypaid a cashdividendof $2,fi)0 to owners

Bequircd:

(a) Show he effects of the above ransactions n the accountingequationbelow:

Assets = Uabili$es + Share'holders'Eouitv

Cash + Accounts + Office + [-and =

Receivable FumitureAccounts +Payable

Capital + RetainedProfit$

(1 \

(8) ., .. .--rg\(10) __ - ..

/n \tL l

_(3)

r5\

Total .

MDIS-PCBM Principles of Accounting& Fmauce



t

t

a. Increa$en assets

ExercisesnrulesPfDoubleEntrY

Exe,rcisc .9

Onwhich ideof the T' - accountseach f the ollowing ecorded? uta({ on hecorrect ide'

Rules f Asspts

Debit& Debi t J l lCredi t

+ Owner',sEauitv

Debit I lt Credit

Put in the 4gbit side

of the tTt account

,1

b. Decreasen assets

(e.9.

e, ncreasen owner'sequitY

Exercise1. 0

statewhetherhe ollowing ransacdonsesultn increasesrdecreasesn thecashAcgount f A' shena retailer-Tlck

({ therelevantcolunn.

l

f

f

L

t

f-

!-

tr

b.

\

i-

a.

b.

d.

e.

f.

c.h.

P,ut n the qrqdlt side

o-f he 3T'account

CashDecrepse

c. lncreasen liabilities(e.g - -

d. Decreasen liabilities

Decreasen owner's equitY(e.g.

Ca$h

Increase

Paidcash o Alice l-ee for amountowed

A Shenbrings in cashas additional nvestment

in thebusiness.Boughtgoods or cash-

Soldgoods or cash

Gavecash oan to anemPloYee'

Receivedcash rom Li for amountdue

A Shenwithdrew cash o payhis householdexpenses.-

Jackgave A Shena cash oan

Exercise 1.11

Statewh€ther he following transacdonsesult in increase r decrease r haveno effect on ttre u!i[$ of Huang's

busines. lick ({) therelevantcolumn'

a- Purchased typewrite'r rom Win Ltd on credit terms'

b. Hurrg receivedgoodsmeant or resale rom

his regularsuPPlier,Lao.

c. Huan! paidcash ot a-oon owing to Tung Ltd'

d. Soldgood on credit to Jin.

e. Huan! Urings n cashas additiural capital

f. Received ash rom Lin for amountdue'

e. Purchasedorry forcash

t. ronnadebtor,pays$1,0S o Huang'sbusiness

LisbilitiesLiabilitis Liabilities

Increase Dgff€aEC Noeffect

lr

:

-

MDIS.PCBMt-12 ninEple;of eccounting & Finance



TINIT I:ACCOTJNTINGEOUATIONAND RTJLES FDOUBLE ENTRY

Exercisq. 1.12 The following are ransactionsof Mr. Dollah, in theanalysischartbelow.

(Rernember:ollowing tlr accountiagentity principle all business ransactions rerecorded rom the

business/company'soint of view')

Rulesof Assets =-L!gD!!lEs-

+ OwnerlsEquitvDebit& Debit llCreoit Debit[ ltCredit Debltllt C"eait

Credit

1 Aus : Dottah starteda companyby depsiting ffi0,6)0 cash capitaQ nto thecorftpany.

Analysis: (a) tbeCo.'s cash ur asset) ncrtssed T- Debit CashA/c by $80'0@-(b) the Co.'s capital(owner'sequity; increased . Crcdit Cepital AlCby $80'000

2 Auq: Tlw companyboughta computerfor $4,0M cash

Analysis:(a) Co.'s computer asset)ncreased f . Lebit ComputE $,/cby $4'S0.(b) Co.'s cash asset)decreased . Credit CashA/c by $4'00O'

3 Ar Companyobtaineda bank oanof $2A(XN um Richbank"

Analysis:(a) Co.'s cash asset)ncreased1. Debit .C.$hA/c by $20'000-(b) Co.'s bonowings, he bank oan Qiability) ncreasedf. Credit

Bank l,oans A/SbY$20,ffi0'

4. AUe: Dollah witMrew $1,@0cashftom campary or wtn use'

Analysis: a) Co.'s capital(Owner'sequity) decrease. Debit Csnitqt A/q by $l'000

O) Co.'s caslr asset)decreasedby $1,000. Credit CashA/c by $l'000.

Nots if the Drawings' accounts used honthe Drawingsaccountwill be ncreased y $ ,000

andyou ilebit DrawingsA/c.

Date Accouuts

Involved

Typeof Effect Amount

Acrcormts Increasd DebiU

Aug-

-;ah

Assei Insease t Debit $80.(D0

.. Canital Owner'sEouitv Increase - C-rcdit . . , $80,0.S

W Z Combuter Asset . Increase ? Debit 54.000

Cash Asset -Fecrease -Credit $4.000

Aug 3

Aug 4

MDIS-PCBM Principles Accounting & Finance



Exercise l.!3 Thefollowing are ransactio:ts f Mr' Ali'

(Remember:ollowing theaccountingentity principleall business ransactionsarerecorded rom the

business/company'solntof view')

fi:ffi--ff ;i,;,ffi ;;il;vlIg"p"':f19^Y'g:.*!:tp1l'"'"necompanv";;;;tu;*" *

"i"oi1fiomModern umitureor $800'

-l-J

_r-J

Il-J

_lr-J

-lr.-.J

_l.--r

-l-r

_lr.-r

-.-r_l--l

:lE-r

Jr_.J

_lI--l

_,-l

17242728

Souiht om"""quipment

by cash or $500'

p"iA'fufoa"* Fumiture ttre'amountowing to them, $800 n cash

Mr. Ali withdrew$1,000cash or personaluse

Rules f Aryts

Debit& Debit lJCreAitCredit

+ Owner'EEouitvDebit l1 Creait

. -DralvinesDebit I lCreOit

Required:T":ffi; the analysis hart(sampleshownbelow)' analyse heabove ransactions'

Accounts Type of Amount

April 17

April24

Effect ,tncrease/ DebiU

April23

b. Journalise the abovetransactions(This part reserved or Lesmn 2)_lr.-J

_-l r

_[-,.1

DetqApr.15

Acgg-qntitle 4 Exole$ation

Cash asset)

Debit($) gredit$)

4,0004,000

Captal (Owner's F,Coiq)

April lT Furniture assetl 800ModernRuniure (ltabilitYl

Aplil27

Apri l28. . . . . . .

b-

l-

l-MDIS-PCBM

t-14 ffi;ttesoi A-ountiug & Finance



{JNIT I:ACCOLINTING EOUATION AND RULES OF-IPOUBLEENTRY

E:rercise 1.14: The following arc transactionsof Mr. JohnLim's a soleuader or July.July I Johnstartsa cmpatry by depositing $2500 (capital) nto the co.'s bank accountJuly2 Boughtoffice fumitureby cheque$150July 3 Boughtmachinery$750on credit from Planners td.July 5 Bought a motor vanpayingby cheque$6fi)Iuly 8 Soldunsuitableoffice furniture for $60oncredit o Walker & SonsJuly 15 Paidthe amountowrng o Planners rd $750by cheque.July 23 Received heamountdue frcm Walker & Sons$6On cash.July3l Boughtmue machineryby heque$280.

Rulesof AsseB = Uabilities + Owner's EouitvDebit D-bir TJGdit D"bit lTffit D"bittlTF.'fritCredil

Requircd:a. Using heanalysis hart samplehown elow),analyseheaboveransactions.

Dalo Accounts Ilpe oJ Effect AtnawtlInseasol Dehitl

Decraa:co ?rp.ditInwlved Accoants

July I Bank AssetCaoital Owner'sEouitv

Irrcrease Debit $2J00Increase Credit $2-500

July .

July 3

DateJuly t

ftrhr (

July23

b. Journallse the above hnsactiom (Ihis part rcserved or L*sson 2)

Ap,count ifle & Elplamtion Debit($) Cr€dit6)

July2

July3

July5

July8

July 15

MDIS-PCBM l-15 Principlesof Accounting& Finance



-

Solution to Exercisespn Accounting BqqgEon

Soiution to Exercise 1.2

Total assets $60.000+ 10,000+ 20,000+ 5,0fr) * 5,000= $1oo'ooo

TotalLiabilities= $14,000+14,000+ 2,0ffi = $30"000

Capital= $70,000 ($l00,0fiXassets) = 30,0ffi(liabilities) + 70'000(capital))

Solution to Exercise13 (ABC Company)

Aqsets $) = Liabilities {$l + Equitv($)

Cash+fumirure +Debtors = Overdraft + &editors +Capital

I July: 29,500 12,000 58,900 = 20,U)0 2[4ffi 55'000

(a) -10.000 +10.000

(b) +S.000 ,, -8.000 =

(d)_ +15.0fi) - +15.fi)0

(e) -- +5.000 = -+5'000

Toral42300-+22.000+50.900= 35-0(n + 20-200.+ 60-000

lr

Solution to Exercise L4 ()(YZ Company)

A$sets$'lCash + Debtors + Furniture + Van =

1June: 12,000 8,000 10,000 25'(X[ =

= LiabiHtiesJg.)loan + Creditors + Capital

15,000 5,000 35,000

Equirv{$)

l'-

b

L-

F|:|-

1-

ts

t-

[-

ts

(a)

(a) - : .OQO- .- . = - : . -

(e) 4.000 ., +10.000 +6.0fi)

IO-+S.OOO-

= .- ' - -

G)

(h)_ -?nn = -300

Toral10.60o 6.ffi0 + 9.900 +,35.fi)0= 12000 + 9.800 + 39J00

T

ts

L-

F

(U) IZ.OOO -Z.ft00 = .

t-

t-

F



Solution to Sxercise 1.5 (Amer Researchers)

Office

Soludon to Exercise1.6 (Gary & Monlca Low)

Cash + Acc-ounts +Stationery+ Land

= Liabilities S_narehorcequity

Accounts Retained

25,000

350

1.900

-100

-480-100

-1,200

25{t 25000 200

Shareboldens'

Ugbifties + EqultY

Aeormts PaidgP Retain9d

1 25,000

2 350

3 -20.000 20,000

4 1.900

5 -100

6Nota businesstramsaction

7 400

-100

I 5.000 -5,000

I -1294

Bal. 10.100 350 15,0m

+50000

40,000

+5J00

-1,100

-1,200

4SO

-400

{40,000 =

+ +50,0fi)

+

+

+

++

+

+

+

+

+

+5Jfi)+3,0(X)

-l,l0o

-12m

-400

Not a lansaction of the business



-t,000

-22,000 =

f

+

+ -2,1m

33,300 2,000 500 18,000 = 100 + 50,000 3.700

53,800

Solutiono Exercise.? @r. AnneGanClinic)

53,800

+1,ffiO

+22,000

:2,100

Date

Jan.

t-

l-

l-

L

L

L

L

Assets

Accounls Medical

Cash Rec'able SuPPlies

= Liabilities

A,/cs

= Payable Bank

Efi.*Y

Reffi

Capital ffiand

F

L

Solution to Exercise 1.8 (ReliableLtd)L

L

L

L

Assets$hareholders'

Uabilitieq + EouitY

Amunlg + g@jlal Retained

1

Cash+Accounts+Off ice

Receivable Fumiture

1l;;';;lr I-so,oooI3l I | 2o,ooo

Land

| 50,000I

r_ I

6 +20-0

I -15.0 +15.0

12 +2.0

15 Nota Business transaction

t5-31 +4.0 +4.0

't5-31 -1.4

-1.0

-0.3

28 +0.5

30 *10.0

31 -1.5

+15.3 +4.0 +1.5 +15.0

35.8 35.8

L

-

MDIS.PCBM l-18 Principlesof Accounting& Finance



7

I

I

10

IJNIT I:ACCOUNTING EOJATION AND RLiLES OFDOUBL,EENTRY

H

H1".'lH__!gg_

t l

H

I -rr,ooo

_28,Agg_

t l

t=

H_20,000-_

t lI ro,ooo

Hl-"ffi]

=

----goqo--

I u,o*

E -2,000

l--r-*tl- -*rll----;ll-'*1tr;;tf-r-ooo__99{0q._

4

5

6

Aug. l

Solufion to Exercise1.9

Increaseo thedebit side of 'T' account- r, d, f.lnsrease o the credit side of'T' account:- b, c, e.

Solution to Bxercise 1.10

IncreaseintheCashAeount:- d, f,hDecreasea the CashAccounfi- a. c, e, g,

Solution to Exercise 1.11

Insreasen liability:- a" bDecreasen liability:- cNoeffecti d,e, ,g,h

Solution o 1.O

Date AcountsInvolved

Typeof EffectAccounb Incrcosrl DebiU

Decrease Crcdit

Amount

CashCanital

Asset Increase DebitOwns's Eouitv Increase t Gedit

$80,{m$80-m0

Aug 2 ComputerCssh

Asset lncreaseI DebilAsset hcrease I Gedit

$4,000s4-m0

Aug 3 C.ash AssBank oan LiabilitY

Inoease IIncrease

$20,000$20.0m

DebitCr€dit

Aug 4 CapitatCash

Owner's EguityAs€t

DecFease DebitDecrease I Credit

$1,000$1,000

r99{ss._-l9gg_

Solution to 1.13

a Using he analFis chart(s@ple shownbelow),analysehe abovebansactioru.

MDIS*PCtsM l-19 PrinciplesofAccounting & Finance



AmountDate Typeof

Accounts

;ffits" T-D"ui $4'oooApril 15 Cash

Capital Oy'ner's &gity lncrease I -Crpdit$4'000

April l7 Office Furn. ^Arssetln"t"ut" I Debit $800

ModernFum- Liabitity lncrease1 Credit $800

April 24 Office EquiPCash

AssetAsset

IncreaseIDecrease

$500$500

DebitCredit

Aptit T, ModernFurn LiabilitY-

Cash Asset

Decrease

DecreaseJ

DebilCredit

$800$800

April 28 DrawingsCash

Owner's EquitY Increase I

Asset Decrcase $1,000

I-,1

_lf-l

-J-J

-l-l

-I-l-)--t

:t-l

:l)rI

:lf-I-:,--l

:ll

H

,r

J1...4

-l--d

-l-d

Il.-rd

Idt

I.f

.{

d

IJ

July 3l Machinery Asset rncrcats w"

Solution to 1.14

Date AccountsInvolved

Julv 5 Motor Van

, Effect. , Amount

Increasd Debit/

e Debit $750

'"" ' _ pr*n"r*Ji riuuitr,y Sifff ;9#' n$ffiAsset Increase Debit $600 Bank

Increase Debil $60

iliei o"crease cPoit $600---;;-:. Incrcase Debitt" Debit $60

r.snttur"e ry$ *fff:f ffilt f#t" Debit $750Juty t5 PlannerLtd

sa"k A*$"t *trryry"ftdit S7':'

JDebit $2'500

. Capital --Ownpr'sEquitv 'Inqrease

Ctedit $2'5(X)

nrc:- r:rr*iirrra Asse.t tncie*" Debit $150

Jilotrt"tFumitureAsset

MDIS-gCBMr-zo ffi?--ptesoraccounting& Finarce

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Review Questions Tabular Summary