APPLIED ACCOUNTING YEAR ONE

Class Exercise Sheet Week

Student’s Name……………………………………………………………………………………………………….
Group #.........................................................................................................................................................................
Exercise One:
The following transaction were performed by tulip business during the first year of operations
1. Owner invested $100,000 cash in the business
2. The Business borrowed a bank loan for $200,000 in cash
3. The business provided cash services to clients for $50,000 cash
4. The business provided credit services to a client $20000
5. The client in transaction 4 paid $5000 of her balance
6. The business purchased equipment for $70,000 in cash
7. The business purchased supplies for $2000 on account
8. The business paid the advertising bill for the month for $1000 in cash
9. The business received the utilities bill for $500
10. The business paid the above utilities bill
11. The owner withdrew $5000 in cash for his personal use
12. The business purchased a one year insurance policy for $60000
13. The business received $10000 cash deposits from clients for services to be provided in the coming period

Required : Analyze the effect of the above transactions on the accounting equation

1
 Assets Liabilities Owner’s Equity
Tra cash Accounts Equipment Supplie Prepaid Bank Acc/ Unearned Capital Drawin Revenues Expenses
ns Receivable s Insurance Loan Payable Revenue Cr gs Cr Dr
Dr

1 100,000Dr 100,000
Cr

2 200,000Dr 200,00
0Cr

3 50,000Dr 50,000Cr

4 20,000Dr 20,000Cr

5 +5000Dr -5000Cr

6 -70,000Cr +70,000Dr

7 +2000 +2000Cr
Dr

8 -1000Cr -1000 Dr

9 +500Cr -500Dr

10 -500Cr -500Dr

11 -5000Cr -
5000Dr

12 -60,000Cr +60,000Dr

13 +10,000Dr +10,000
Cr

2
Journal Entries
Date Debit Credit
1 cash 100,000
Capital 100,000
2 Cash 200,000
Bank loan 200,000
3 Cash 50,000
Service Revenue 50,000
4 Accounts Receivable 20,000
Service Revenue 20,000
5 Cash 5,000
Accounts Receivable 5.000
6 Equipment 70,000
Cash 70,000
7 Supplies 2,000
Accounts Payable 2,000
8 Advertising expenses 1000
Cash 1000
9 Utilities expenses 500
Accounts Payable 500
10 Accounts Payable 500
Cash 500
11 Drawings 5000
Cash 5000
12 Prepaid Insurance 60,000
Cash 60,000
13 Cash 10,000
Unearned Revenues 10,000

3
Posting to ledger

4
Preparing trial Balance

5
Exercise Two:
Verity Siding Company, owned by S. Verity, began operations in May and completed the following transactions during that first
month of operations. Show the effects of the transactions on the accounts of the accounting equation by recording increases and
decreases in the appropriate columns in the table below. Do not determine new account balances after each transaction. Determine the
final total for each account and verify that the equation is in balance.

May 1 S. Verity invested $90,000 cash in the company.

2 The company purchased $25,000 in office equipment in cash.
3 The company rented office space and paid $3,000 for the May rent.
4 The company installed new vinyl siding for a customer and immediately collected $5,000.
5 The company purchased a $2,500 copy machine for office use on credit.
9 The company completed work for additional customers on credit in the amount of $16,000.
15 The company paid its employees' salaries $2,300 for the first half of the month.
17 The company installed new siding for a customer and immediately collected $2,400.
20 The company received $10,000 in payments from the customers billed on May 9.
28 The company paid $1,500 on the copy machine purchased on May 8.
31 The company paid its employees' salaries $2,400 for the second half of the month.
31 The company purchased supplies for $5,300 on credit
31 The company paid $450 for this month's utility bill.

6
 Assets Liabilities and Owner’s Equity
Date cash Accounts Supplies Equipment Account Capital Revenues Expense
Receivable s s
Payable

1 90,000 90,000

2 -25000 25000

3 -3000 -3000

4 +5000 +5000

5 2500 2500

9 16000 16000

15 -2300 -2300

17 +2400 2400

20 +10,000 -10,000

28 -1500 -1500

31 -2400 -2400

31 5300 +5300

31 -450 -450

7
Date Debit Credit
1 Cash 90,000
Capital 90,000
2 Equipment 25,000
Cash 25,000
3 Rent Expense 3,000
Cash 3,000
4 Cash 5,000
Service Revenue 5,000
5 Equipment 2,500
Accounts Payable 2,500
9 Accounts Receivable 16,000
Service Revenue 16,000
15 Salaries expense 2,300
Cash 2,300
17 Cash 2,400
Service Revenue 2,400
20 Cash 10,000
Service Revenue 10,000
28 Accounts Payable 1,500
Cash 1,500
31 Salaries expense 2,400
Cash 2,400
31 Supplies 5,300
Accounts Payable 5,300
31 Utilities expense 450
cash 450

8
Posting to ledger

Preparing Trial Balance