month of September 2002, the first month of operation.
a) Record the transactions in General Journal
b) Post each entry to the perspective account. Use the four column account.
c) Prepare a trial balance
d) Prepare a worksheet. Assume the following adjustment for the accounts and journalize them.
e) Prepare a Balance sheet, Income statement and statement of owners equity
f) close the temporary accounts.
Sept. 10 Mr. John transferred cash form his personal account to be used in the business,
Birr 10,000.
10 Paid rent for the month, Birr 500
11 Purchased a truck for Birr 12,000 by paying Birr 3,000 Cash and giving a notes payable for the difference.
12 Purchased equipment on account Birr 1,460.
13 Purchased supplies on account Birr 240.
14 Paid insurance premiums of Birr 170 (Dr. prepaid insurance)
15 Received cash for services completed Birr 360.
16 Purchased Supplies on account Birr 240.
18 Paid salaries of Birr 900.
21 Paid its liabilities for the purchase of equipment
24 Recorded sales on account Birr 2,080
26 Received an invoice for truck expense Birr 115
27 Paid utilities expense Birr 205.
27 Paid miscellaneous expenses Birr 73.
28 Received cash from customers on account birr 1,420
30 Paid salaries to employees Birr 950
30. The owner withdrew Birr 1, 750 for personal use.
a) Recording the transactions in General Journal:
Sept. 10 Cash 10,000
Owner's Equity 10,000
Sept. 10 Rent Expense 500
Cash 500
Sept. 11 Truck 12,000
Notes Payable 9,000
Cash 3,000
Sept. 12 Equipment 1,460
Accounts Payable 1,460
Sept. 13 Supplies 240
Accounts Payable 240
Sept. 14 Prepaid Insurance 170
Cash 170
Sept. 15 Cash 360
Accounts Receivable 360
Sept. 16 Supplies 240
Accounts Payable 240
Sept. 18 Salaries Expense 900
Cash 900
Sept. 21 Accounts Payable 1,460
Cash 1,460
Sept. 24 Accounts Receivable 2,080
Sales Revenue 2,080
Sept. 26 Truck Expense 115
Accounts Payable 115
Sept. 27 Utilities Expense 205
Cash 205
Sept. 27 Miscellaneous Expense 73
Cash 73
Sept. 28 Cash 1,420
Accounts Receivable 1,420
Sept. 30 Salaries Expense 950
Cash 950
Sept. 30 Owner's Equity 1,750
Cash 1,750
b) Posting each entry to the respective account using the four-column account:
Cash:
Date Description Debit Credit Balance
Sept. 10 Owner's Equity 10,000 10,000
Sept. 10 Rent Expense 500 9,500
Sept. 11 Truck 3,000 6,500
Sept. 14 Prepaid Insurance 170 6,670
Sept. 15 Accounts Receivable 360 7,030
Sept. 18 Salaries Expense 900 6,130
Sept. 21 Accounts Payable 1,460 4,670
Sept. 24 Sales Revenue 2,080 6,750
Sept. 26 Truck Expense 115 6,865
Sept. 27 Utilities Expense 205 6,660
Sept. 27 Miscellaneous Expense 73 6,587
Sept. 28 Accounts Receivable 1,420 8,007
Sept. 30 Salaries Expense 950 7,057
Sept. 30 Owner's Equity 1,750 8,807
Owner's Equity:
Date Description Debit Credit Balance
Sept. 10 Cash 10,000 10,000
Sept. 30 Cash 1,750 8,707
Rent Expense:
Date Description Debit Credit Balance
Sept. 10 Cash 500 500
Truck:
Date Description Debit Credit Balance
Sept. 11 Notes Payable 9,000 9,000
Notes Payable:
Date Description Debit Credit Balance
Sept. 11 Truck 9,000 9,000
Equipment:
Date Description Debit Credit Balance
Sept. 12 Accounts Payable 1,460 1,460
Accounts Payable:
Date Description Debit Credit Balance
Sept. 12 Equipment 1,460 1,460
Sept. 13 Supplies 240 1,720
Sept. 16 Supplies 240 1,960
Sept. 21 Cash 1,460 500
Supplies:
Date Description Debit Credit Balance
Sept. 13 Accounts Payable 240 240
Sept. 16 Accounts Payable 240 480
Prepaid Insurance:
Date Description Debit Credit Balance
Sept. 14 Cash 170 170
Accounts Receivable:
Date Description Debit Credit Balance
Sept. 15 Cash 360 360
Sept. 24 Sales Revenue 2,080 2,440
Sept. 28 Cash 1,420 3,860
Sales Revenue:
Date Description Debit Credit Balance
Sept. 24 Accounts Receivable 2,080 2,080
Truck Expense:
Date Description Debit Credit Balance
Sept. 26 Accounts Payable 115 115
Utilities Expense:
Date Description Debit Credit Balance
Sept. 27 Cash 205 205
Miscellaneous Expense:
Date Description Debit Credit Balance
Sept. 27 Cash 73 73
Salaries Expense:
Date Description Debit Credit Balance
Sept. 18 Cash 900 900
Sept. 30 Cash 950 1,850
c) Trial Balance:
Account Debit Credit
Cash 8,707
Rent Expense 500
Truck 9,000
Notes Payable 9,000
Equipment 1,460
Accounts Payable 500
Supplies 480
Prepaid Insurance 170
Accounts Receivable 3,860
Sales Revenue 2,080
Truck Expense 115
Utilities Expense 205
Miscellaneous Expense 73
Salaries Expense 1,850
27,070 27,070
d) Worksheet (assuming the following adjustment for the accounts, and journalizing them):
1. Accrue salaries expense for the month: Birr 500
Adjusting Entry:
Sept. 30 Salaries Expense 500
Salaries Payable 500
2. Depreciate Equipment, 5% per annum:
Adjusting Entry:
Sept. 30 Depreciation Expense (Equipment) 73
Accumulated Depreciation (Equipment) 73
e) Balance Sheet, Income Statement, and Statement of Owner's Equity:
Balance Sheet (As of September 30, 2002):
Assets:
Cash 8,707
Accounts Receivable 3,860
Supplies 480
Prepaid Insurance 170
Equipment 1,460
Less: Accumulated Depreciation (73)
Total Assets 14,604
Liabilities:
Notes Payable 9,000
Accounts Payable 500
Salaries Payable 500
Total Liabilities 10,000
Owner's Equity:
Owner's Capital 8,707
Less: Owner's Drawings (1,750)
Total Owner's Equity 6,957
Total Liabilities and Owner's Equity 16,957
Income Statement (For the month of September 2002):
Sales Revenue 2,080
Less: Truck Expense (115)
Less: Rent Expense (500)
Less: Utilities Expense (205)
Less: Miscellaneous Expense (73)
Less: Depreciation Expense (Equipment) (73)
Less: Salaries Expense (1,350)
Net Income 764
Statement of Owner's Equity (For the month of September 2002):
Owner's Capital (Beginning Balance) 10,000
Add: Investment in Cash 10,000
Less: Owner's Drawings (1,750)
Add: Net Income 764
Owner's Capital (Ending Balance) 19,014
f) Closing the Temporary Accounts:
Closing Entry:
Sept. 30 Sales Revenue 2,080
Truck Expense 115
Rent Expense 500
Utilities Expense 205
Miscellaneous Expense 73
Depreciation Expense (Equipment) 73
Salaries Expense 1,850
Income Summary 664
Sept. 30 Income Summary 764
Owner's Capital 764