HARAMAYA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE
Fundamental of Accounting I, Individual Assignment
1. On January 1, 2020, Mr Abebe Chala, established his own consultancy business. He named
his business "AC Consultancy Services". The objective of the business is to render financial
consultancy services to clients on a fee basis. The following transactions are occurred during
the first month of operation of the firm (from January 1 to 31 of January, 2020).
a. Transaction 1: January 1: Abebe deposited birr 50,000 cash in a bank account in the
name of his business- AC Consultancy Services.
b. Transaction 2: January 3: Abebe transferred furniture worth birr 50,000 from his home
for office uses by AC Consultancy Services. He also has extra home furniture and other
personal assets worth birr 1000,000.
c. Transaction 3: January 6: the business purchased office supplies worth birr 5,000 on
cash
d. Transaction 4: January 7: AC paid Birr 4,000 cash for advertising its services through
Fana TV.
e. Transaction 5: January 10: AC received Birr 50,000 cash for consultancy services it
rendered to cash clients.
f. Transaction 6: January 11: AC purchased a office equipment for Br 40,000
g. Transaction 7: January 14: AC received birr 30,000 additional cash investment from its
owner.
h. Transaction 8: January 16: AC rendered consultancy services worth Birr 60,000 to
clients who promised to pay the sum within two weeks.
i. Transaction 9: January 21: AC borrowed birr 14,000 cash from Commercial Bank of
Ethiopia.
j. Transaction 10: January 29: AC incurred and paid for the following expenses. Wages
birr 20,000, Rent birr 15,000 Utilities birr 2,000, and others birr 3000.
k. Transaction 11: January 27: AC collected birr 50,000 from its credit customers.
l. Transaction 12: January 31: AC paid its owner Mr Abebe cash of birr 10,000 cash to pay
house utility expenses
m. Transaction 13: January 31: AC determined that cost of supplies remained on hand at the
end of the current month total birr 1,500.
Required:
a. Journalize the above transactions in a two-column journal
b. Post the journal entries to “T” accounts
c. Prepare unadjusted trial balance
d. Prepare and complete a worksheet based on the following additional information

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 e. Prepare income statement
f. Prepare statement of owners’ equity
g. Prepare balance sheet
h. Prepare statement of cash flow
1. On March 1, 2020, Tahir Muktar, a famous businessman in Addis, opened a business named
“Universal Garage” which is organized as a sole proprietorship. The business is established
to render car repair, maintenance and related services for fees. Below are chart of accounts
for and selected transactions completed by Universal Garage in March 2020.
a) Chart of accounts
Universal Garage
Chart of Accounts
100 ASSETS 300 OWNER'S EQUITY
110 CURRENT ASSETS 301 Tahir, Capital
111 Cash 302 Tahir, Drawings
112 Accounts Receivable 303 Incomes Summary
114 Supplies
116 Prepaid Rent 400 REVENUES
117 Prepaid Insurance 401 Fees Earned
120 PLANT ASSETS 410 Other Income
121 Land
123 Machinery 500 EXPENSES
123.1 Accumulated Depreciation-Machinery 501 Salary Expenses
125 Office Equipment 502 Supplies Expenses
125.1 Accumulated Depreciation-Office Equipment 503 Rent Expenses
200 LIABILITIES 504 Insurance Expenses
210 CURRENT LIABILITIES 505 Depreciation Expenses
211 Account Payable 506 Interest Expenses
213 Salaries Payable 510 Miscellaneous Expenses
216 Interest Payable
220 NON-CURRENT LIABILITIES
221 Long-term Bank Loan

b) Transactions
Mar 1 Received the following assets from its owner, Tahir:
Cash....................................... Br, 8,300
Supplies ................................. 2,000
Office Equipment................... 10,000
2 Borrowed Br 5,000 from Dashen Bank
3 Paid Br 1,800 for rent on a building leased for business purposes
3 Purchased welding and other repair machinery for Br 3,600 cash
4 Paid Br 200 for a radio advertisement
8 Sold for Br 200 cash an old office equipment with a recorded cost of Br 200

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 13 Paid weekly salary Br 1,200
16 Received Br 4,400 from services rendered on cash
20 Paid weekly salary Br 1,200
20 Received Br500 royalties for idle repair machinery it leased to other businesses
20 Delivered service on credit, Br 6,000
21 Purchased additional repair machinery on account for Br 2,000 from Sámi-Engineers
23 Received Br 5,000 additional cash investment from its owner
24 Repaid Br 1,000 bank loan and paid Br 100 interest on bank loan
26 Purchased supplies for Br 800 cash
27 Paid Br 100 for customer entertainment and other items
27 Paid weekly salary Br 1,200
31 Paid Br 500 for electricity and other utilities consumed during the month
31 Received Br 4,200 cash from credit customers
31 Paid Tahir Br 1,800 for personal uses
Required:
a) Journalize the above transactions in a two-column journal
b) Post the journal entries to “T” accounts
c) Prepare and complete a worksheet based on the following additional information
i. Cost of supplies remained unconsumed on Mar 31 is Br 900
ii. The amount paid on Mar 3 is for a three-month rent
iii. The amounts of depreciation for machinery and office equipment are estimated to be
Br 560 and Br 1,900 respectively
iv. Universal Garage usually pays Br 1,200 for employee's salary every Saturday for a
six-day work week ended on that day
v. Interest on bank loan accrued but not paid on March 31 total Br 100
d) Prepare financial statements for the month
e) Journalize and post adjusting entries
f) Journalize and post-closing entries
g) Prepare post-closing trial balance
2. On January 3, 2003, Ale Hab, an ex-manager of the CBE Bole Branch, established his own
consultancy business. He named his business "AH Consultancy Services". The objective of
the business is to render financial consultancy services to clients on a fee basis. Below are
business activities occurred during the first month of operation of the firm (3 to 31 of
January, 2003).
a. Alemu deposited $20,000 cash in a bank account in the name of his business - AH
Consultancy Services (Deposit slip # 1). He has $250,000 cash in his personal bank account
with Dashen Bank and $50,000 cash in a safe deposit box at home.
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b. Alemu transferred furniture worth $30,000 from his home for office uses by AH Consultancy
Services (Asset receipt note #1). He also has extra home furniture, residential house and
personal car worth $620,000, $800,000 and $360,000, respectively.
c. Alemu purchased office supplies worth $5,000 from various suppliers agreeing to pay the
sum within two weeks (Purchase invoice #1). Two-fifth of the supplies will be used for
personal purposes while the remaining is for use by AH. Three-fifth of the liability is
arranged to be settled from business cash sources.
d. AH received $20,000 cash for consultancy services it rendered to a cash client (Cash sales
invoice #1).
e. AH paid $3,000 cash for advertising aired through ETV (Cash payment voucher #1).
f. AH forecasted that services fees in the next two weeks will amount to $5,000.
g. AH received $10,000 additional cash investment from its owner (Cash receipt note #1).
h. AH rendered consultancy services worth $15,000 to clients who promised to pay the sum
within a month (Credit sales invoice #1).
i. AH sold one of the furniture invested by its owner for $5,000 cash (Cash receipt note #2).
The furniture had a recorded value of $5,000.
j. AH collected $5,000 cash from clients who received services in item-8 above (Cash receipt
note #3).
k. AH paid $2,000 cash to suppliers on credit (Cash payment voucher #2).
l. AH purchased a used car for business purposes. The business paid $8,000 cash for the car
(Cash payment voucher #3). Brokers estimated that the car currently worth only $5,000 and
the Inland Revenue assessed the car at $12,000 for property tax purposes.
m. AH borrowed $4,000 cash from Dashen Bank (Cash receipt note #4). The loan is repayable
over ten months.
n. AH employed an accountant and a secretary for monthly salary of $1,200 and $700,
respectively (Employment contract #2 and #4).
o. AH incurred and paid for the following expenses(Cash payment voucher #4)
 Wages................................................. $6,000
 Rent.................................................... 4,500
 Utilities................................................ 1,200
 Others.................................................. 800
p. AH determined that cost of supplies remained on hand at the end of the current month total
$1,300 (Supplies inventory report #1).
q. AH paid $450 cash to Dashen Bank consisting of $400 principal and $50 one month interest
on part of the loan due in January (Cash payment voucher #5).
r. AH paid its owner $5,000 cash to pay house utility expenses (Cash payment voucher #6).
Required:
a) Analyze and record the above events in the financial records of AH Consultancy Services
b) And prepare financial statements for the business for the month of January 2003.

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 The trial balance that follows for Shewa, Company does not balance:
Shewa Company
Trial Balance
June 30, 2021

Debit Credit
Cash $ 5,875
Accounts receivable $ 3,620
Equipment 14,020
Accounts payable 5,290
Property tax payable 500
A. Shawnee, capital 17,900
Service revenue 7,027
Advertising expense 1,132
Property tax expense 1,100
Salaries expense 4,150
Totals $29,897 $30,717

Your review of the ledger reveals that each account has a normal balance. You also discover the
following errors:
A. Property Tax Expense was understated by $500 and Property Tax Payable was overstated
by $500.
B. A $650 credit to Service Revenue was incorrectly posted as a $560 credit.
C. A debit posting to Salaries Expense of $350 was not done.
D. A $750 cash withdrawal by the owner was debited to A. Shawnee, Capital for $750 and
credited to Cash for $750.
E. A $650 purchase of supplies on account was debited to Equipment for $650 and credited
to Cash for $650.
F. A cash payment of $120 for advertising was debited to Advertising Expense for $210
and credited to Cash for $210.
G. A $385 collection from a customer was debited to Cash for $385 and debited to
Accounts Receivable for $385.
H. A cash payment on account for $165 was recorded as a $165 credit to Cash and a $165
credit to Accounts Payable.
I. A $2,000 note payable was issued to purchase equipment. The transaction was neither
journalized nor posted.
Instructions prepare a correct trial balance. (Note: You may need to add new accounts.)

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 The following trial balance of Watteau Co. does not balance.

Each of the listed accounts should have a normal balance per the general ledger. An examination
of the ledger and journal reveals the following errors.
a. Cash received from a customer on account was debited for $570, and Accounts
Receivable was credited for the same amount. The actual collection was for $750.
b. The purchase of a computer printer on account for $500 was recorded as a debit to
Supplies for $500 and a credit to Accounts Payable for $500.
c. Services were performed on account for a client for $890. Accounts Receivable was
debited for $890 and Service Revenue was credited for $89.
d. A payment of $65 for telephone charges was recorded as a debit to Office Expense for
$65 and a debit to Cash for $65.
e. When the Unearned Service Revenue account was reviewed, it was found that service
revenue amounting to $325 was performed prior to June 30
f. A debit posting to Salaries and Wages Expense of $670 was omitted.
g. A payment on account for $206 was credited to Cash for $206 and credited to Accounts
Payable for $260.
h. A dividend of $575 was debited to Salaries and Wages Expense for $575 and credited to
Cash for $575.
Instruction: Prepare a correct trial balance.

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