Assignment

Basic Accounting

Prerequisite
Before you take this assessment, it is recommended that you go through the module / courses to develop basic understanding of
the topic. All these modules are beginner friendly and self-paced. Once completed, you are advised to take this assessment to
further reinforce and reflect the learnings.
Assignment 1. Basic Accounting Journal
Entries Exercise
• Duration: You should try and finish this exercise within 15 minutes.
• Q: On March 1, 2020, Abraham Taylor established Fast Purpose Machines Pvt.
Ltd. Abraham completed the following transactions during the month of March:
• a. Opened a business bank account with a deposit of 30,000 from personal funds.
• b. Purchased supplies (pens, file folders, papers, etc.) on account, 2,650.
• c. Paid creditor on account, 1,500.
• d. Earned sales commissions, receiving cash, 36,750.
• e. Paid rent on office and equipment for the month, 5,200.
• f. Withdrew cash for personal use, 8,000.
• g. Paid automobile expenses (including rental charge) for month, 2,500, and
miscellaneous expenses, 1,200.
• h. Paid office salaries, 9,250.
• i. Determined that the cost of supplies on hand was 900; therefore, the cost of supplies
used was 1,750.
• Indicate the effect of each transaction.
Solution to Exercise 1
• http://www.accounting-basics-for- • e). Rent expense...............5,200.00
students.com/basic-accounting-journal-entries- Cash.............................5,200.00
exercise.html To record paid for office and equipment
rental
• a). Cash on hand.......30,000.00 • f). Withdraw................8,000.00
Investment.................30,000.00 Cash..........................8,000.00
To record investment by owner. To record withdraw by owner.
• b). Supplies...............2,650.00
Accounts Payable..............2,650.00 • g). Rent expense...............2,500.00
To record purchase supplies on account. Miscellaneous expense......1,200.00
• c). Accounts Payable........1,500.00
Cash............................3,700.00
Cash.........................1,500.00 To record payment for automobile &
To record payment to creditor. miscellaneous expense.
• d). Cash....................36,750.00 • h). Salaries expense.........9,250.00
Sale commission................36,750.00 Cash..........................9,250.00
To record earned sale commission. To record payment for office staff
• e). Rent expense...............5,200.00 salaries.
• i). Supplies expense............1,750.00
Supplies on hand.................1,750.00
To record supplies expense for march.
Assignment 2. Trial Balance Exercise
• Your task:
• 1. Prepare the trial balance as at Dec 31, 2019 for Impressario Security
Services Inc.

• Time limit: 25 minutes

Trial balance details and transactions
• The trial balance of • The following transactions took 9. Replenished the petty cash fund
Impressario Security. as of place during 2019 for Impressario on August 1. At this time, the
Security: petty cash fund had only $7 of
January 1, 2019 had the 1. Paid the salaries payable from currency left. It contained the
following normal balances: 2018. following receipts: office supplies
expense $23, cutting grass $55,
• Cash 74,210 2. On March 1, 2019, Impressario
established a $100 petty cash and miscellaneous $14.
• Accounts receivable 13,500 fund to handle small
10. Billed $52,000 of monitoring
• Supplies 200 expenditures.
services for the year.
3. Paid $4,800 on May 1, 2019, for
• Prepaid rent 3,200 one year's lease on the company 11. Paid installers and other
• Merchandise inventory (24 van in advance.
employees a total of $25,000
@ $265; 1 @ $260) 6,620 4. Paid $7,200 on May 2,2019 for cash for salaries.
one year's office rent in advance.
• Land 4000 5. Purchased $400 of supplies on 12. Collected $89,300 of accounts
• Accounts payable 1,950 account. receivable during the year.
6. Purchased 100 alarm systems
• Unearned revenue 980 for $28,000 cash during the year. 13. Paid $3,600 of advertising
expense during the year.
• Salaries payable 1,000 7. Sold 102 alarm systems for
$57,120. All sales were on
• Common stock 50,000 account. (Compute cost of goods
14. Paid $2,500 of utilities expense
for the year.
• Retained earnings 47,800 sold using the FIFO cost flow
method) 15. Paid a dividend of $10,000 to the
8. Paid $2,100 on accounts shareholders.
payable during the year.
Solution to Exercise 2. Trial Balance for
Impressario (Palicio)
** Cash includes $100 petty cash. Calculation of cash
balance:
74,210 - 1,000 - 4,800 - 7,200 - 28,000 - 2,100 - (100 -
7) - 25,000 + 89,300 - 3,600 - 2,500 - 10,000
= 79,217

The opening balance of prepaid rent ($3,200) has been

expensed out during 2016 as we have assumed this rent
(that was paid the previous year) applies to the 2016
year. This is a likely assumption as there was a new
prepaid rent cash payment on 2 May, 2016.

It is not stated in the question whether the unearned

revenue of $980 at the beginning of 2016 was actually
earned during the year. In this solution we have
assumed that the unearned revenue still remains
unearned at the end of 2016. However, it is quite
acceptable to treat this as having been earned during
2016. If treating it as earned during 2016 one would add
$980 to revenue and remove the unearned revenue
account ($980 - $980).
Assignment 3. Creditor, Purchasers and
Cost of Goods Sold Exercise
• Duration: 15 mins
• YOUR TASK
• a) Calculate purchases.
• b) If purchases during February were $39,000 what is the Cost of Goods Sold for February?
• Balances at 31 January 2019:
• Debtors control account.............................$32,400
• Creditors control account...........................$25,200
• Inventory...................................................$30,000
• Balances at 28 February 2019:
• Debtors control account.............................$24,000
• Creditors control account...........................$29,160
• Inventory...................................................$36,000
• Extract from cash payments journal at 28 February 2019:
• Payments to creditors.................................$41,040
• Additional Information:
• a) Gross profit mark-up is 20% on cost
• b) Inventory is kept on the perpetual system
• c) All purchases and 80% of sales are on credit
Solution to Exercise 3
• Closing balance creditors control = Opening balance creditors control +
Credit Purchases - Payments to Creditors
$29,160 = $25,200 + Credit Purchases - $41,040
If we switch this around and make Credit Purchases the subject:
Credit Purchases = $29,160 - $25,200 + $41,400
= $45,360
Since credit purchases make up 100% of the purchases, the full purchases figure
is also $45,360 .

• Cost of Goods Sold = Opening inventory + Purchases - Closing Inventory

= $30,000 + $39,000 - $36,000
= $33,000