Level Three: Worksheet One

Project One: The following transactions are taken from DOT Company which engaged in
renting Construction materials for sub-contractors. The beginning balance of DOT Company was
Cash of Birr 50,000, Accounts Payable of Birr 15,000 and DOT Capital Birr 35,000.
a. Purchased construction materials on Miaza 7 for birr 15,000 for cash.
b. On Miaza 7, purchased office supplies for birr 1500 for cash.
c. On Miaza 8, purchased office furniture for birr 12,000 for cash.
d. On Miaza 10, paid birr 5,000 for the rent of the building for Miaza.
e. On Miaza 10, received cash from rent of construction materials birr 20,000.
f. On Miaza 11, received cash from the rent of construction materials to contractors birr 30,000.
g. On Miaza 12, purchased 20,000 of store equipment on account.
h. On Miaza 18, paid birr 2,000 to an assistant for day labor workers.
i. On Miaza 19, received cash from rent of construction materials birr 19,000.
j. On Miaza 30, paid birr 8,000 from the amount owed on Miaza 12.
k. On Miaza 30, purchased additional construction materials for birr 12,000.
l. At the end of the month, supplies on hand was amounted birr 1,200.
Instructions: the main tasks of the project are:
1. Prepare the necessary journal entries for the above transactions.
2. Post the journal to the ledger using T accounts.
3. Prepare the trial balance as of Miaza 30, 2000.
4. Prepare the Income Statement for the month ended Miaza 30, 2000.
5. Prepare a Balance sheet as of Miaza 30, 2000.
Project Two: SATCON Company bank statement dated December 31, 2013 shows the
balance of birr 24,594.72. The company’s cash records on the same date show a balance of birr
23,196.79. The following additional information is available.
 The following checks issued by the company to its customers are still outstanding:
Ck No. 846 issued on Nov 29, Birr 320.
Ck No. 875 issued on Dec 26, Birr 49.21
Ck No. 878 issued on Dec 29, Birr 275
Ck No. 881 issued on dec 31, Birr 186.50.
 A deposit of Birr 400 made on Dec 31 does not appear on Bank statement.
 An NSF ckeck of birr 850 was returned by the bank with the bank statement.
 The bank charged birr 50 as service fee.
 The interest income earned on the company’s average cash balance at bank was birr
1,237.22.
  The bank collected a note receivable on behalf of the company. Amount received by the
bank on the note was birr 550. This includes birr 50 interest income and the bank charged
a collection fee of birr 10.
 A deposit of birr 430 was incorrectly entered as birr 340 in the company’s cash records.
Instruction: Prepare bank reconciliation and pass the necessary journal entries.

Project Three: Accounting for Receivables

Mande Trading Company received a 60 days, 6% notes for birr 40,000 dated April 10, 2014 for
customers on account. On May 20, 2014, the note is discounted at commercial bank of Ethiopia
at the rate of 8%.
Instructions:
1. Determine the maturity value of the note.
2. Determine the number of days in the discount period.
3. Determine the discount.
4. Determine the amount of the proceeds.
5. Record the necessary journal entries on April 10 and May 10, 2014.

Project Four: Accounting for Payroll

Awassa Textile Factory pays the salary of its employees according to the Ethiopian calendar
month to the federal government tax authority. The forthcoming data related to the month of
Ginbot, 2005.
Name of Employee Basic Salary Allowance OT Hrs worked Duration of OT
worked
Aster Feleke 4,480 Transport 1,100 8 Upto 10PM
MamoAlemu 1,600 House 500 10 10PM to 5AM
SelamBogale 2,400 - - 6 Weekly Rest Days
Martha Negash 1,280 Position 600 12 Public Holidays

Additional Information
The management of the factory usually expects a worker to work 160 hours in the month and all
workers have done as expected. All workers are permanent employees except MamoAlemu.
SelamBogale agreed to have monthly birr 300 to be deducted and paid to credit association of the
factory as monthly savings. The application pension rate of permanent employees is 7% from
employees and 9% from employer.
Instruction:
1. Prepare the Payroll Register for the month of Ginbot 2005.
2. Record the payment of salary as of Ginbot 30,2005 using Ck No 15 as a Source
document.
3. Record the Payroll Tax Expense for the month of Ginbot 2005 using Memorandum #10.
4. Record the payment of the cliam of the credit association of the factory that arises from
Ginbot Payroll salary assuming that the payment was made on Sane 4, 2005.
5. Assuming that the withholding taxes and payroll taxes of the month of Ginbot 2005 have
been paid on Sane8, 2005 using Ck#20, record the required journal entry.
 Answer for Worksheet One
Project One
Task 1: Transactions are analyzed and recorded in the journal (Journalizing)
A. Cash………………..50,000 G. Cash……………….30,000
Accounts Payable……..15,000 Service Revenue………..30,000
DOT Capital………35,000 H. Store Equipment.….20,000
B. Construction Materials....15,000 Accounts Payable…..20,000
Cash……………….……15,000 I. Wages Expense………2,000
C. Office Supplies…………15,000 Cash……………….2,000
Cash……………………15,000 J. Cash…….……..19,000
D. Office Furniture…..15,000 Service Revenue………19,000
Cash………..……….15, 000 K. Accounts Payable……8,000
E. Rent Expense……5,000 Cash……………………..8,000
Cash…………………..5,000 L. Construction Materials……12,000
F. Cash……………….20,000 Cash…………………..12,000
Service Revenue……20,000 M. Supplies Expense…….300
Supplies………..………300
Task 2: Transactions are posted to the ledger (Posting)
Cash 27,000
50,000 15,000
20,000 1,500 Store Equipment
30,000 12,000 20,000 Wages Expense
19,000 5,000 2,000
2,000 20,000
2,000
8,000
12,000 Accounts Payable
119,00 55,500 8,000 15,000 Supplies Expense
0 20,000
63,500 5,000 35,000
27,000
Supplies
1,500 300 DOT Capital
35,000

1,500 300 35,000

1,200
Service Revenue
Office Furniture 20,000
12,000 30,000
19,000
12,000 69,000

Construction Materials
Rent Expense
15,000
5,000
12,000
5,000
300

300
Task 3: Preparing Trial Balance
Fana Broad Casting
Trial Balance
For the month Ended Miaza 30, 2000

Account Title Dr Cr
Cash 63,500
Supplies 1,200
Office Furniture 12,000
Construction Materials 27,000
Store Equipment 20,000
Accounts Payable 27,000
DOT Capital 35,000
Service Revenue 69,000
Rent Expense 5,000
Supplies Expense 300
Wages Expense 2,000
Total 131,000 131,000

Fana Broad Casting

Income Statement
For the month Ended Miaza 30, 2000
Revenues:
Service Revenue…………………………………………………………………………..69,000
Operating Expenses:
Rent Expense……………………………………..5,000
Supplies Expense……………………………….….300
Wages Expense……………………………………2,000
Total operating Expenses………………………………………………………………….7, 300
Net Income…………………………………….…………………………………………..61,700

Fana Broad Casting

Statement of Owner’s Equity
For the month Ended Miaza 30, 2000
Beginning Capital………………………………………………………………………….35, 000
Net Income………………………………………………………………………………….61, 700
Ending Capital……………………………………………………………………….…....96,700
 Fana Broad Casting
Balance Sheet
Miaza 30, 2000
Assets
Cash …………………………………..….63, 500
Supplies…………………………........……1,200
Office Furniture…………………………...12,000
Construction Materials………………….…27,000
Store Equipment…………………………...20,000
Total Assets………………………………123,700
Liabilities
Accounts Payable………………………..27,000
Owner’s Equity
DOT Capital…………………….……….96,700
Total Liabilities and Owner’s Equity……123,700

Project Two: Bank Reconciliation

SATCON Company
Bank Reconciliation
December 31, 2013
Balance Per Bank Statement…………………………………………………..24,594.72
Add: Deposit in Transit…………………………………………………..…...400
Subtotal………………………………………………………………………..24,194.72
Less: Outstanding Checks……………………………………………………….830.71
Adjusted Balance Per Bank Statement…………………………………….……24,164.01
Balance Per Depositor Records…………………………..…………………….23,196.79
Add: Notes Receivable………………………………500
Interest Income………………………………….1,287.22
Depositor Error……………………….…………………90
Subtotal…………………………………………………………………………..25,074.01
Less: NSF…………………………………………850
Bank Service Charge…………………….…..60 910
Adjusted Balance Per Depositors Records………………………………………..24,064.01
Journal Entries
1. Cash in Bank……………………………..1,877.22
Notes Receivable…………………………………………500
Interest Income………………………………………..…1,287.22
Accounts Payable…………………………………………..90
2. NSF…………………………………850
Misc. Admin. Expense……………..60
Cash in Bank……………………………..910
 Project Three: Accounting for Receivables
Maturity Value
Interest = 40,000*60/360*6/100
= 400
MV = 40,000+400 = 40,400
Due Date
Term of Note……………………60
Dates of April……….30
Issuance Date………...10 20
Number of Remaining Days 40
May ……………………………….31
June………………………………...9
June 9, 2014
June 9, 2014
April
April 10,10, May 20,2014
2014_______ _40 days________May
2014 20,2014________20 days______June 9,
2014

Discount = 40,400*8/100*20/360
= 179.56
Proceeds = 40,400 – 179.56
= 40,220.44
Journal Entries

April 10, 2014

Notes Receivable…………….40,000
Accounts Receivable………………..40 ,000

May 20, 2014

Cash in Bank………………..40,220.44
Notes Receivable………………………….40,000
Interest Income…………………………..220.44

Project Four: Payroll System

Basic Salary per Hour

1. 4,480/160 = 28
2. 1,600/160 = 10
3. 2,400/160 = 15
4. 1,280/160 = 8
Overtime Earnings

1. 8*(28*1.25) = 280
2. 10*(10*1.50) = 150
3. 6*(15*2.0) = 180
4. 12*(8*2.5) = 240

Gross Earnings

1. 4,480 + 1,100 + 280 = 5,860

2. 1,600 + 500 + 150 = 2,250
3. 2,400 + 0 + 180 = 2,580
4. 1,280 + 600 +240 = 2,120

Employee Income Tax

1. 5,860 – 1,000 = 4,860*30% - 412.50 = 1,045.50

2. 2,250*20% -117.50 = 332.50
3. 2,580*25%-235 = 410
4. 2,120*20% -117.50 = 306.50

Pension Contribution

1. 4,480*7% = 313.60
2. No Pension
3. 2,400*7% = 168
4. 1,280*7% = 89.60

Credit Association

1. SelamBogale = 300

Total Deduction

1. 1,045.60 + 313.60 = 1,359.10

2. 332.50 + 0 = 332.50
3. 410 + 168 + 300 = 878
4. 306.50 + 89.60 = 396.10

Net Pay

1. 5,860 – 1,359.10 = 4,500.90

2. 2,250 – 332.50 = 1,917.50
3. 2,580 – 878 = 1,702
4. 2,120 – 396.10 = 1,723.90
 Awassa Textile Factory
Payroll Register
Ginbot, 2005

S. Name of Earnings Gross Deductions Total Net Pay Sign

N Employee Basic Allowance OT Earnings Income Tax PC Other Deduction
Salary
1 Aster Feleke 4,480 1,100 (Transport) 280 5,860 1,045.50 313.60 - 1,359.10 4,500.90
2 MamoAlemu 1,600 500(House) 150 2,250 332.50 - - 332.50 1,917.50
3 SelamBogale 2,400 180 2,580 410 168 - 878 1,702
4 Martha Negash 1,280 600(Position) 240 2,120 306.50 89.60 - 396.10 1,723.90
Total 9,760 2,200 850 12,810 2,094.50 571.20 - 2,965.70 9,844.30

Prepared By:_________ Checked By:___________ Approved by:_____________

Date:_____ Date:____ Date:______
Sign:____________ Sign:____________ Sign: ___________
Journal Entries
1. To record the salary expense for the period:
Salary Expense---------------12,810
Income Tax Payable-----------------2,094.50
Pension contribution Payable-------571.20
Credit Association Payable------------300
Cash-------------------------------------9,844.30

2. To record the payroll tax expenses:

Payroll Tax Expense-------------897.60
Pension Contribution Payable-----------897.60
(8,160*11% = 897.60)

3. To record the Credit Association by SelamBogale

Credit Association Payable------------300
Cash---------------------------------------300

4. To record the payroll and withholding tax to the inland revenue authority:
Income Tax Payable---------------------2,094.50
Pension Contribution Payable----------1,468.80
Cash-----------------------------------------3,563.30

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 Level Three: Worksheet Two
Project One:
Task One: Record the following transactions into the journal entry for AB Company.
A. On January 1, 2010, AtoAbebe, the owner of AB Company invested Br 30,000 in cash.
B. On January 2, 2010, AB Company purchased supplies on account for Br 15,000.
C. On January 5, 2010, AB Company provided service on account for Br 15,000.
D. On January 7, 2010, AB Company paid Br 5,000 to creditors on purchase of January 2.
E. On January 10, 2010, AB Company collected cash of Br 2,000 from customers on account.
F. On January 25, 2010, AB Company paid Br 5,000 for Rent and Br 2,000 for Utilities.
G. On January 30, 2010, AB Company paid Br 8,000 for Salaries to Employees.
H. On January 31, 2010, supplies used during the month were determined to be Br 10,000.
Task Two
Post the transactions you had recorded in Task One to the ledger using T accounts assuming that
the beginning balance were as follows:
Account Title Amount (In Birr)
Cash 15,000
Accounts Receivable 2,000
Supplies 1,000
Abebe’s Capital 10,000
Accounts Payable 8,000

Task Three
Using the following data prepare unadjusted trial balance for Fana Broadcasting during
December 31, 2012 assuming that all accounts have their own Normal Balance.
Account Title Amount in Birr
Cash 30,000
Accounts Payable 10,000
Accounts Receivable 20,000
Fana’s Capital 15,000
Fees Earned 20,000
Supplies 2,000
Bank Loan 15,000
Prepaid Rent 1,000
Notes Payable 3,000
Fana’s Drawings 1,500
Wages Expense 2,000
Unearned Fees 2,500
Office Equipment 10,000
Rent Expense 2,000
Accumulated Depreciation 3,000

Task Four
Perform financial calculation; journalize correcting and adjusting entries using the trial balance
you prepared above.
A. Service provided on account for Br 1,000 was erroneously debited to cash and credited to Fees
Earned.
B. Payable on account of Br 2,000 was erroneously debited to cash and credited to account payable.
C. At the end of the period supplies on hand was Br 800.
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D. Depreciation for the period was determined to be Br 1,500.
E. Interest accrued but not recorded on the bank loan, Br 1,000.
Task Five
Prepare Financial Statements
Using the data in Task 3 and Task 4, prepare:
a. Adjusted Trial Balance
b. Income Statement
c. Owner’s Equity Statement, and
d. Balance Sheet

Project Two: Ethiopian Payroll System

The following information are given for Tokuma Company for Sane, 2007
S.N Name Basic Salary Allowance
01 LamiGuta 5,800 1,200
02 AlemTaye 2,100
03 Said Ahmed 1,200

Additional Information
 All employees have expected to work 8 hrs per day and 160 hrs per month.
 During the month W/roAlem worked 10 hrs overtime during Public Holiday.
 LamiGuta’s allowance is not taxable.
 All employees contribute 10% of their basic salary to Great Renaissance Dam.
 Lami Contributed 500 birr to credit association as monthly saving.
 Pension is charged at 7% from employee and 9% from employer.
Instruction
1. Prepare a payroll register
2. Pass the necessary journal entries.

Project Three: Reconciliation of Accounts of Cash

 Balance Per Bank Statement-------------55,000
 Deposit in transit--------------------------8,000
 Bank Debit--------------------------------1,200
 Checks Outstanding-----------------------5,000
 Depositor Balance-------------------------60,200
 Bank collected Br 2,200 of which 200 birr is interest.
 Bank service charge is 500 birr.
 Depositor error is 2,700 (3000 as 300).

Instruction: Prepare a Bank Reconciliation and pass the necessary journal entries.

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 Answer for Worksheet Two
Task 1: Transactions are analyzed and recorded in the journal (Journalizing)
N. Cash………………..30,000 R. Cash……………….2,000
Abebe’s Capital………30,000 Accounts Receivable……2,000
O. Supplies…………15,000 S. Rent Expense……….5,000
Accounts Payable………15,000 Utilities Expense……2,000
P. Accounts Receivable…..15,000 Cash………………….7,000
Fees Earned………….15,000 T. Salaries Expense………8,000
Q. Accounts Payable……5,000 Cash……………….8,000
Cash…………………..5,000 U. Supplies Expense…….10,000
Supplies………..……10,000
Task 2: Transactions are posted to the ledger (Posting)
Cash Fees Earned
15,000 5,000 15,000
30,000 7,000
15,000
2,000 8,000
47,000 20,000
27,000 Rent Expense
A/Receivable 5,000
2,000 2,000 5,000
15,000

Utilities Expense
17,000 2,000
2,000
15,000
Supplies 2,000
1,000 10,000
15,000 Supplies Expense
10,000
16,000 10,000
6,000 10,000

A/Payable Salaries Expense

5,000 8,000
15,000

5,000 23,000
18,000

Abebe’s Capital
10,000
30,000

40,000

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 8,000

8,000

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Task 3: Preparing Unadjusted Trial Balance
Fana Broad Casting
Unadjusted Trial Balance
For the Year Ended December 31, 2012
Account Title Dr Cr
Cash 30,000
Accounts Receivable 20,000
Supplies 2,000
Prepaid Rent 1,000
Office Equipment 10,000
Accumulated Depreciation 3,000
Accounts Payable 10,000
Notes Payable 3,000
Unearned Fees 2,500
Bank Loan 15,000
Fana’s Capital 40,000
Fana’s Drawing 1,500
Fees Earned 20,000
Wages Expense 2,000
Rent Expense 2,000
Total 68,500 68,500
Task 4: Adjustment data are assembled and analyzed.
Incorrect Entries
A. Cash…………………….1,000
Fees Earned……………….1,000
Adjusting Entries
Accounts Receivable…….1,000
Fees Earned………………...1,000
Correction
From Cash = -1000
To Accounts Receivable = +1,000
Incorrect Entries
B. Cash…………………….2,000
Accounts Payable……………….2,000

Adjusting Entries
Accounts Payable…….1,000
Cash………………...1,000
Correction
From Cash = -4000 2,000 correcting and 2,000
From Accounts Payable = -4,000 adjusting

C. Adjusting Entry
Supplies Expense……….1,200
Supplies………………………1,200
Therefore, Supplies = 800 and Supplies Expense = 1,200.

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 D. Adjusting Entries
Depreciation Expense………………..1,500
Accumulated Depreciation………………1,500

Accumulated Depreciation
=3,000(Cr) + 1,500 (Cr) = 4,500
Therefore, Depreciation Expense = 1,500
Accumulated Depreciation = 4,500

E. Adjusting Entries
Interest Expense…………..1,000
Interest Payable………………1,000
Therefore, Interest Expense = 1,000
Interest Payable = 1,000
Task 5: An adjusted trial balance is prepared.

Fana Broad Casting

Unadjusted Trial Balance
For the Year Ended December 31, 2012
Account Title Dr Cr
Cash 25,000
Accounts Receivable 21,000
Supplies 800
Prepaid Rent 1,000
Office Equipment 10,000
Accumulated Depreciation 4,500
Accounts Payable 6,000
Interest Payable 1,000
Notes Payable 3,000
Unearned Fees 2,500
Bank Loan 15,000
Fana’s Capital 40,000
Fana’s Drawing 1,500
Fees Earned 20,000
Wages Expense 2,000
Supplies Expense 1,200
Depreciation Expense 1,500
Interest Expense 1,000
Rent Expense 2,000
Total 67,000 67,000

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Task 6: Financial statements are prepared.
Fana Broad Casting
Income Statement
For the Year Ended December 31, 2012
Revenues:
Fees Earned…………………………………………………..20,000
Expenses:
Wages Expense…………………2,000
Rent Expense……………………2,000
Supplies Expense………………..1,200
Depreciation Expense…………..1,500
Interest Expense…………………1,000
Total Expenses…………………………………………………..7,700
Net Income…………………………………………..………….12,300
Fana Broad Casting
Statement of Owner’s Equity
For the Year Ended December 31, 2012
Beginning Capital…………………………………………..15,000
Net Income……………….12,300
Less: Drawing……………..1,500
Increases in Owner’s Equity……………………….………..10,800
Ending Capital………………………………………………..25,800
Fana Broad Casting
Balance Sheet
December 31, 2012
Assets
Cash…………………………………………………….25,000
Supplies……………………………………………………800
Accounts Receivable………………………………..….21,000
Prepaid Rent……………………………………….…….1,000
Office Equipmet…………………...…10,000
Less: Accu. Depn…………….………..4,500 5,500
Total Assets…………………………………………….53,300
Liabilities
Accounts Payable………………….….6,000
Interest Payable…………………..…..1,000
Notes Payable…………………………3,000
Unearned Fees……………………..….2,500
Bank Loan…………………….……….15,000
Total Liabilities…………………………….………….27,500
Owner’s Equity
Fana’s Capital……………………………….……..…..25,800
Total Liabilities and Owner’s Equity……………..…53,300

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Task 7: Closing entries are journalized and posted to the ledger.
1. Revenues………………20,000
Income Summary…………..20,000
2. Income Summary……….7,700
Wages Expense………………..2,000
Rent Expense…………….……2,000
Supplies Expense……….…….1,200
Depreciation Expense……..…1,500
Interest Expense…………..….1,000
3. Income Summary…….12,300
Fana’s Capital…….………….12,300
4. Fana’s Capital……….1,500
Fana’s Drawing…………….1,500

Task 8: A post-closing trial balance is prepared.

Fana Broad Casting
Post-Closing Trial Balance
December 31, 2012
Account Type Dr Cr
Cash…………………………………….25, 000
Supplies……………………………………800
Accounts Receivable…….…………..….21, 000
Prepaid Rent……………….……….……..1,000
Office Equipment……………………...…10,000
Accumulated Depreciation..….………………………………..……..4,500
Accounts Payable………………………………………………….….6,000
Interest Payable…………………………………………………..…..1,000
Notes Payable………………………………………..………………3,000
Unearned Fees…………………………………………………....….2,500
Bank Loan………………………………………………………….15,000
Fana’s Capital……………………………….…………………..…..25,800
Total 57,800 57,800

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 Tokuma Company
Payroll Register
Sane 30, 2007

S.N Name of Earnings Gross Deductions Total Net Pay Sign

Employee Basic Allowance OT Earnings Income PC GRD CA Deduction
Salary Tax
1 Lami Guta 5,800 1200 - 7,000 1,367.50 406 580 500 2,853.50 4,146.50
2 Alem Taye 2,100 - 328.13 2,428.13 372.03 147 210 - 729.03 1,699.10
3 Said Ahmed 1,200 - - 1,200 132.50 84 120 - 336.50 863.50
Total 9,100 1,200 328.13 10,628.13 1,872.03 637 910 500 2,047 6,709.10

Prepared By:_________ Checked By:___________ Approved by:_____________

Date:_____ Date:____ Date:______
Sign:____________ Sign:____________ Sign: _________

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Journal Entries
5. To record the salary expense for the period:
Salary Expense---------------10,628.13
Income Tax Payable-----------------------1,872.02
Pension contribution Payable------------637
GRD Payable-------------------------------910
CA Payable----------------------------------500
Cash-----------------------------------------6,709.10
6. To record the payroll tax expenses:
Payroll Tax Expense-------------819
Pension Contribution Payable-----------819
7. To record the payment of GRD and CA:
GRD Payable----------------910
CA Payable-----------------500
Cash---------------------------------------1,410
8. To record the payroll and withholding tax to the inland revenue authority:
Income Tax Payable---------------------1,872.03
Pension Contribution Payable----------1,456
Cash-----------------------------------------3,328.03

Project Three: Bank Reconciliation

ABC Company
Bank Reconciliation
December 31, 2010
Balance Per Bank Statement------------------------------------------------55,000
Add: Deposit in Transit------------------8,000
Bank Debit---------------------------1,200 9,200
Subtotal------------------------------------------------------------------------64,200
Deduct: Checks Outstanding------------------------------------------------5,000
Adjusted Balance Per Bank Statement----------------------------------59,200
Balance Per Depositor’s Records--------------------------------------------60,200
Add: Note Receivable-----------------------2,000
Interest Income ---------------------------200 2,200
Subtotal--------------------------------------------------------------------------62,400
Deduct: Depositor Error----------------------------2,700
Bank Service Charge-----------------------500 3,200
Adjusted Balance Per Depositor’s Record--------------------------------59,200
Journal Entries
1. Cash in Bank------------------------2,200
Notes Receivable-------------------------2,000
Interest Income-----------------------------200
2. Accounts Payable--------------------2,700
Misc. Admin. Expense---------------500
Cash in Bank-------------------------3,200

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 Level Three: Worksheet Three

Project One: Preparation of Income Tax for the Tax Purpose

The following information is given for Tikur Abay Construction (S.C) for the month ended June 30, 2013:
Sales……………………………..………..200,000
Sales Return and Allowances……………..2,000
Sales discounts……………………….…..1,500
Cost of Goods Sold………………….….110, 600
Operating Expense………………..…….26, 100
Interest Expense…………………....……3,000
The operating expenses includes entertainment expenses and uncollectible accounts expenses of birr 6,000 and 2,700 respectively. Assume
that the company is expected to pay 30% of business profit tax. It is decided to distribute 60% of net income after tax to the shareholders as
Dividends.

Instruction:
1. Prepare income Statements for tax purposes
2. Calculate Business Profit Liability.
3. Calculate dividend liability for the year
4. Calculate dividend payout.

Project Two: Ethiopian Payroll System

The following information are given for Tokuma Company for September, 2013
S.N Name Position Basic Salary Allowance Overtime Earnings
01 RoberaTola Manager 4,560 500 1200
02 KenaFufa Accountant 3,570 500 1500
03 Sifen Tura Secretary 2,750 200 700
04 BontuTaresa Cashier 5,300 700 700
05 Kanrabbi Chala Cleaner 1,540 350 750

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Additional Information
 Each employees allowance is nontaxable.
 Pension is charged at 7% from employee and 9% from employer.
 The employer paid Br. 20 each for service charges to bank.

Project Three: Bank Reconciliation

The following information pertains to Nun Company:
1. Balance per bank statement dated March 31, 2008 is Br 8,900.
2. Balance of the cash account on the company’s book as of March 31, 2008 is Br 8,918.
3. Br 2,600 deposit of March 31 was not shown on the bank statement.
4. Of the check recorded in cash disbursement in March, some checks totaling Br 2,100 have not yet cleared by the bank.
5. Service and collection charges for the month were Br 20.
6. The bank erroneously charges the Nun Company account for the Br 400 check of another company.
7. The bank credited the company account with the Birr 2,000 proceeds of non interest bearing note is collected for the company.
8. Br 150 check marked NSF was returned with the bank statement written to Nun Company.
9. Bank paid and charged to the company accounts Br 1,015 interest bearing note.
10. A cash receipt of Br 263 was recorded as Br 236.
11. The bank credited the companies account for Br 40.00 interest earned to the companies.

Instructions:
1. Prepare bank reconciliation.
2. Pass the necessary journal entries.

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Project Four: Foreign Currency Exchange

Jitu Company imported different items costing for USD 35,000, Insurance Br 50,000 and Freight of Br 12,000. The fund transferred to the
company was USD 50,000 and Euro 100,000. The following exchange rates were applicable:

Buying =Bittaa Selling =Gurgurtaa

USD 18.80 25.50

Euro 19.20 26.00

For the fund transferred to the company account selling rate is applied. Assume that the beginning balance of Jitu Company is Br 1,500,000.

Instruction:

1. Determine the total cost of imported items, the bank service charge is 3%.
2. Calculate the total fund transferred to the company account.
3. What will be the ending balance of cash in bank account for the company?

Answer for Worksheet Three

Project One: Income Statement for Tax Purpose

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 TikurAbay Construction
Income Statement
For the month ended June 30, 2013
Sales--------------------------------------------------------------------------------------------------200,000
Less: Sales Return and Allowance------------2,000
Sales Discounts----------------------------1,500 200000-2000-1500=196500
Net sales------------------------------------------------------------------------------------------------196,500
Less: Cost of Goods Sold----------------------------------------------------------------------------110,600
Gross Profit----------------------------------------------------196500-110600--------------------85,900
(26,100 – 2,700 – 6,000)
Less: Operating Expenses------------------------------------------------17,400
Interest Expense------------------17,400+3,000 = 20,400
Income before Tax------------------------------------------------85,900+20400-----------------------65,500
Less: Business Income Tax 65,500*(30%)/100 -------------------------------------------------------19,650
Net Income-----------------------------------------------------65500-19650---------------------------- 45,850

Task 1.1: Net Income is Br 45, 850

Task 1.2: Business Profit Tax is 65,500 x 30% = 19,650

Task 1.3: Dividend is 60% of Net Income = 60% x 45,850 = 27,510

Dividend Tax = 27,510 x 10% = 2,751

Task 1.4: Dividend Payout = 27,510 – 2,751 = 24,759

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Project Two: Payroll
Tokuma Company
Payroll Register
September 30, 2013

S.N Name of Position Earnings Gross Deductions Total Net Pay Sign
Employee Basic Allowance OT Earnings Income PC Other Deductio
Salary Tax n
1 RoberaTola Manager 4,560 500 1,200 6,260 1,353.50 319.20 - 1,672.70 4,587.30
2 KenaFufa Accountant 3,570 500 1,500 5,570 1,112 249.90 - 1,361.90 4,208.10
3 Sifen Tura Secretary 2,750 200 700 3,650 627.50 192.50 - 820 2,830
4 BontuTaresa Cashier 5,300 700 - 6,000 1,192.50 371 - 1,263.50 4,436.50
5 KanrabbiChalas Cleaner 1,540 350 750 2,640 340.50 107.80 - 448.30 2,191.70
Total 17,720 2,250 4,150 24,120 4,626 1,240.40 - 5,866.40 18,253.60

Prepared By:_________ Checked By:___________ Approved by:_____________

Date:_____ Date:____ Date:______
Sign:____________ Sign:____________ Sign: ___________

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26 | P a g e
Journal Entries
9. To record the salary expense for the period:
Salary Expense---------------24,120
Income Tax Payable-----------------4,626
Pension contribution Payable-------1,240.40
Cash-------------------------------------18,253.60
10. To record the payroll tax expenses:
Payroll Tax Expense-------------1,594.80
Pension Contribution Payable-----------1,594.80
11. To record the Bank Service Charge
Misc. Admi. Expense----------------100
Cash---------------------------------------100
(20x5)
12. To record the payroll and withholding tax to the inland revenue authority:
Income Tax Payable---------------------4,626
Pension Contribution Payable----------2,835.20
Cash-----------------------------------------7,461.20

Project Three: Bank Reconciliation

Nun Company
Bank Reconciliation
March 31, 2008
Balance Per Bank Statement------------------------------------------------8,900
Add: Deposit in Transit------------------2,600
Bank Error---------------------------400 3,000
Subtotal------------------------------------------------------------------------11,900
Deduct: Checks Outstanding------------------------------------------------2,100
Adjusted Balance Per Bank Statement-----------------------------------9,800

Balance Per Depositor’s Records--------------------------------------------8,918

Add: Note Receivable-----------------------2,000
Depositor Error---------------------------27
Interest-------------------------------------402,067
Subtotal--------------------------------------------------------------------------10,985
Deduct: Service and Collection---------------20
NSF------------------------------------150
Bank Paid and Charged-------------1,015 1,185
Adjusted Balance Per Depositor’s Record--------------------------------9,800

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Journal Entries
1. Cash in Bank---------------------2,067
Notes Receivable-------------------------2,000
Interest Income---------------------------40
Accounts Payable------------------------27

2. Not Sufficient Fund-----------------150

Notes Payable-----------------------1,015
Misc. Admin. Expense-------------20
Cash in Bank---------------------------1,185

Project Four: Foreign Currency Exchange

Task 4.1: Total Cost of Imported Items

CIF = FOB Cost + Insurance + Freight
= (35,000 x 18.80) + 50,000 + 12,000
= 653,000 + 50,000 + 12,000
= 720,000
Bank Service Charge = CIF X 3%
= 720,000 X 3% = 21,600

Total Cost of Imported Item = CIF + 21,600

= 720,000 + 21,600

= 741,600

Task 4.2: Fund Transferred to a Company account

1. USD 50,000 X25.50 = 1,275,000

2. EURO 100,000 X 26.00 = 2,600,000
Total Fund Transferred = 3,875,000

Task 4.3: Ending Cash Balance

= Beginning Cash Balance + Total Fund Transferred – Total Cost of Imported Items

= 1,500,000 + 3,875,000 – 741,600

= 4,633,400

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 Level Three: Worksheet Four
Project One: Monitor and Control Accounts Receivable
Given is the balance sheet of Ashenafi, Berhane, and Dawit partners on Nov 3, 2012 the date the
partners decided to liquidate their partnership.
ABD Partnership
Balance Sheet
November 30, 2012
Cash --------------------------------------------------------Br 70,000
Non Cash Assets---------------------------------------------110,000
Total Assets-----------------------------------------------------------------------180,000
Accounts Payable-----------------------------------------54,000
Ashenafi’s Capital----------------------------------------50,000
Berhane’s Capital----------------------------------------34,000
Dawit’s Capital-------------------------------------------42,000
Total Liabilities and Capital----------------------------------------------------180,000
Between Nov 3 and 30, the non-cash assets were sold for Br 140,000. Ashenafi, Berhane, and
Dawit share income and losses based on their Beginning Capital.
Required: Prepare statement of partnership liquidation and all necessary journal entries to
record liquidation of the partnership.
 Assume that any partners who had debit balances in their capital accounts after loss
distributions immediately paid cash to the partnership.

Project Two: Process Financial Transactions and Prepare Financial Reports

Trans Ethiopia Corporation opened the year 2007, with the following trial balance information
Trans Ethiopia Corporation
Trial Balance
January 1, 2007
Accounts Debit Credit
Cash 100,000
Accounts Receivable 300,000
Land 600,000
Accounts Payable 240,000
Loan Payable 120,000
Capital stock 200,000
Retained Earning 440,000
Dividend
Revenues
Salaries Expense
Rent Expense
Supplies Expense
Interest Expense
Total 1,000,000 1,000,000

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  January transactions are listed below:-
Jan 2: Collected Br 40,000 on an open account receivable.
Jan 3: Purchased additional Track of Land for Br 80,000.
Jan 5: Provided services on account to a customer for Br 60,000.
Jan 7: Borrowed Br 48,000 on a term loan payable.
Jan 11: Paid Salaries of Br 12,000.
Jan 12: Provided services to a customer for cash Br 44,000.
Jan 15: Purchased (and used) office supplies on account Br 8,000.
Jan 17: The Company paid shareholders Br 10,000 dividend.
Jan 20: Paid rent of Br 6,800.
Jan 23: Paid salaries of Br 16,000.
Jan 24: Paid Br 64,000 on the open accounts payable.
Jan 29: Collected Br 200,000 on account receivable.
Jan 31: Repaid loan of Br 88,000.
Jan 31: Paid interest on loan of Br 2,400.
Required:
A. Prepare journal entries for January’s transactions
B. Post journal entries to the general ledger
C. Prepare a trial balance as of Jan 31, 2007
D. Prepare:
I. Income statement
II. Statement of retained earnings, and
III. Balance sheet as of Jan 31, 2007

Project Three: Bank Reconciliation Process

Saba’s Cash Book at 30th November 2007 showed an overdrawn position of Br 2,118 although
her bank statement showed only Br 3,630 overdrawn. Detailed examination of the two records
revealed the following:
a. The debit side of the cash book had been understated by Br 300. Error of recording of
collection of accounts receivable.
b. A check for Br 1,560 in favor of Z Suppliers Ltd had been omitted by the bank from its
statement, the check having been debited to another customer’s account.
c. A check for Br 182 drawn in payment of the telephone expense account had been entered
in the cash book as Br 128 but was shown correctly on the bank statement.
d. A check for Br 210 from customer on account having been paid into the bank was
dishonored and shown as such on the bank statement although no entry relating to the
dishonor had been made in the cash book.
e. The bank had debited a check for Br 126 o Saba’s account in error; it should have been
debited by them to Sheba’s account.
f. A divided of Br 90 on Kay’s holding of Ordinary shares has been paid direct to her bank
account and no entry made in the cash book.
g. Check totaling Br 1,260 drawn on 29th November had not been presented for payment.

30 | P a g e
 h. Deposit in transit Nov 30 totaled Br 1,080.
i. Interest amounting to Br 228 had been debited by the bank but not entered in the cash
book.

Required:
A. Prepare Bank Reconciliation for Saba Company at Nov 30, 2007.
B. Prepare the general journal entries necessary to bring the cash in bank into agreement
with the adjustment.

Project Four: Depreciation

Assume that Mesfin Industrial PLC Company purchased machinery for Br 100,000 on 2001
G.C. The machine has useful life of 5 years and salvage value Br 10,000 during the period of
Mesfin if from Jan 1 upto Dec 31.
Required: Using Double Declining Balance method, calculate depreciation expense for:
1. 2001 G.C
2. 2002 G.C
3. 2003 G.C
4. 2004 G.C
5. 2005 G.C

Project Five: Process Payroll

The following data are taken from Almeda Textile Plc for the month of Hidar, 2009:
Employee’s Name Basic Salary Overtime Worked Allowance
Letay Kidane 8,710 No 1,500/Position
1,000/House
Dawit G/Hiwot 1,250 6hrs Public Holiday (2.5)
Mesfin Bekele 4,242 6 hrs Evening (1.25) 40% of Basic
5 hrs Night (1.50) Salary/Hardship
Welday Niguse 2,308 8 hrs Weekend (2.00)

Additional Infromation:
1. All Employees are permanent and all worked 40 hours per week.
2. During Sane, 2007 E.C all workers have done as they have been expected.
3. WeldayNiguse monthly pay Br 550.00 from his salary for Credit Association.
4. Assuming that pension contribution 7% from Employee and 11% from Employer.

Required:
1. Prepare Payroll Register Sheet.
2. Prepare necessary journal entry for preparation of payroll and payments of deductions to
concerned party.

31 | P a g e
 Answer for Worksheet Four

Project One: Partnership Liquidation

Ashenafi, Berhane, and Dawit
Statement of partnership liquidation
For period November 3 – 30, 2012
Cash Noncash Liabilities Capital
assets Ashenafi(50%) Berhane Dawit(20%)
(30%)
Balances before 70,000 110,000 54,000 50,000 34,000 42,000
realization
Sales of noncash assets +140,000 -110,000 - +12,000 +8,100 +9,900
and division of gain
Balances after realization 210,000 0 54,000 62,000 42,100 51,900
Payment of liabilities -54,000 - -54,000 - - -
Balances after payment 156,000 0 0 62,000 42,100 51,900
of liabilities
Distribution of cash to -156,000 - - -62,000 -42,100 -51,900
partners
Final balances 0 0 0 0 0 0

The entries to record the several steps in the liquidation procedure are as follows:
To record Sales of Assets
Cash………………………………140,000
Noncash Assets……………………….110,000
Loss and Gain on Realization…...……..30,000

To record Division of Gain

Loss and Gain on Realization………30,000
Farley, Capital…………………………………..…..12,000
Greene, Capital…………………………….…...……8,100
Hall, Capital……………………………….…..…….9,900

To record Payment of Liabilities

Liabilities…………………………54,000
Cash……………………………………54,000

To record Distribution of cash to Partners

Ashenafi, Capital…………………………..62,000
Berhane, Capital……………………………42,100
Dawit, Capital……………………………….51,900
Cash………………………………………………..156,000

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Project Two
January 2: Cash-----------------40,000
Accounts Receivable----40,000
January 3: Land-----------------80,000
Cash-----------------------80,000
January 5: Accounts Receivable-----60,000
Service Revenue-----------60,000
January 7: Cash----------------48,000
Term Loan Payable----48,000
January 11: Salaries Expense--------8,000
Cash--------------------------8,000
January 12: Cash---------------44,000
Service Revenue-----44,000
January 15: Supplies Expense------8,000
Accounts Payable--------8,000
January 17: Dividend-------------10,000
Cash--------------------10,000
January 20: Rent Expense---------6,800
Cash----------------------6,800
January 23: Salaries Expense-----16,000
Cash----------------------16,000
January 24: Accounts Payable--------64,000
Cash--------------------------64,000
January 29: Cash------------------200,000
Accounts Receivable-------200,000
January 31: Term Loan Payable-----88,000
Cash-------------------------88,000
January 31: Interest Expense----------2,400
Cash----------------------------2,400

Task 2: Transactions are posted to the ledger (Posting)

33 | P a g e
 Cash Loan Payable
100,000 80,000 88,00 120,000
40,000 12,000 0 48,000
48,000 10,000
44,000 6,800 88,00 168,000
200,000 16,000 0
64,000 80,000
88,000
2,400
432,000 279,200
152,800 Service Revenue
60,000
A/Receivable 44,000
300,000 40,000 104,000
60,000 200,000

360,000 240,000
120,000
Salary Expense
12,000
16,000
28,000

Rent Expense
6,800
Land
6,800
600,000
80,000
Supplies Expense
680,000

A/Payable
64,00 240,000
0 8,000

64,00 248,000
0
184,000

34 | P a g e
 8,000
8,000
Capital Stock
200,000

200,000

Dividend
10,000

10,000

Retained Earnings
440,000

440,000

Interest Expense
2,400

2,400

Trans Ethiopia Corporation

Trial Balance
January 31, 2007

Account Title Dr Cr
Cash 152,800
Accounts Receivable 120,000
Land 680,000
Accounts Payable 184,000
Loan Payable 80,000
Capital stock 200,000
Retained Earnings 440,000
Dividend 10,000
Service Revenues 104,000
Salary Expense 28,000
Rent Expense 6,800
Supplies Expense 8,000
Interest Expense 2,400 ________
Total 1,008,000 1,008,000

Trans Ethiopia Corporation

Income Statement
35 | P a g e
 For the month ended January 31, 2007
Revenues:
Service Revenues-------------------------------------------------------------104,000
Expenses:
Salary Expense----------------------28,000
Rent Expense-------------------------6,800
Supplies Expense--------------------8,000
Interest Expense---------------------2,400
Total Expenses----------------------------------------------------------------45,200
Net Income---------------------------------------------------------------------58,800
Trans Ethiopia Corporation
Statement of Retained Earnings
For the month ended January 31, 2007
Retained Earnings, January 1, 2007---------------------------------------------------440,000
Net Income----------------------------------------58,800
Less: Dividend------------------------------------10,000
Increases in Retained Earnings----------------------------------------------------------48,800
Net Income---------------------------------------------------------------------------------488,800

Trans Ethiopia Corporation

Balance Sheet
January 31, 2007
Assets
Cash-----------------------------------------------------152,800
Accounts Receivable----------------------------------120,000
Land-----------------------------------------------------680,000
Total Assets--------------------------------------------952,800
Liabilities
Accounts Payable-----------------184,000
Loan Payable--------------- --------80,000
Total Liabilities-------------------------------264,000
Stockholders’ Equity
Capital Stock------------------------200,000
Retained Earnings------------------488,800
Total stockholders’ Equity-------------------688,800
Total Liabilities and Stockholders’ Equity……….952,800

Project Three: Bank Reconciliation

Saba Company
Bank Reconciliation
November 30, 2007

36 | P a g e
 Balance Per Bank Statement-------------------------------------------------3,630
Add: Deposit in Transit--------------------------1,080
Error By the Bank-------------------------126 1,260
Subtotal---------------------------------------------------------------------------4,836
Deduct: Cheque omitted Z supplies-------------1,560
Unpresented Cheque--------------------1,260 2,820
Adjusted Balance per Bank Statement-------------------------------------2,016

Balance per Depositor’s Records----------------------------------------------2,118

Add: Suspense Understate-----------------------300
Dividend Received-------------------------90 390
Subtotal-----------------------------------------------------------------------------2,508
Deduct: Interest----------------------------------228
Telephone-----------------------------54
Dishonered Cheque------------------210 492
Adjusted Balance Per Depositor’s Records----------------------------------2,016

Journal Entries
November 30, 2007: Cash in Bank----------------------390
Suspense Understate----------------------300
Dividend Received------------------------90
November 30, 2007: Interest------------------------228
Telephone-------------------54
Dishonered cheque---------210
Cash in Bank-----------------------492

Project Four: Declining Balance Method of Depreciation

Yea Cost Accu. Book Depn Accu. Depn Book Value (End)
r Depn(Beg) Value(Beg) Rate (End)
1 - 100,000 40% 40,000 40,000 60,000
2 40,000 60,000 40% 24,000 64,000 36,000
3 64,000 36,000 40% 14,400 78,400 21,600
4 78,400 21,600 40% 8,640 87,040 12,960
5 87,040 12,960 40% 5,184 92,224 7,776

37 | P a g e
38 | P a g e
Project Five: Payroll
Almeda Textile Plc
Payroll Register
Sane, 2007

S.N Name of Earnings Gross Deductions Total Net Pay Sign

Employee Basic Positio House Hardshi OT Earnings I/Tax PC CA deduction
Salary n Allo. Allo. p Allo.
1 Leta 8,710 1,500 1,000 - - 11,210 3,261 609.70 - 3,870.70 7,339.30
Kidane
2 Dawit 1,250 - - - 117.50 1,367.15 157.63 87.50 - 245.13 1,122.02
G/Hiwot
3 Mesfin 4,242 - - 1,696.80 397.66 6,336.46 979.40 296.94 - 1,276.34 5,060.12
Bekele
4 Welday 2,308 - - - 230.88 2,538.88 399.72 161.56 550 1,113.28 1,425.60
Niguse
Total 16,510 1,500 1,000 1,696.80 745.69 21,452.49 4,797.69 1,155.70 550 6,505.45 14,947.04

Prepared By:_________ Checked By:___________ Approved by:_____________

Date:_____ Date:____ Date:______
Sign:____________ Sign:____________ Sign: ___________

39 | P a g e
Journal entries
1. To record the salary expense for the period:
Salary Expense---------------21,452.49
Income Tax Payable-----------------4,797.69
Pension contribution Payable--------1,155.70
Credit Association Payable-----------550
Cash--------------------------------------14,947.04
2. To record the payroll tax expenses:
Payroll Tax Expense------------1,816.10
Pension Contribution Payable------------1,816.10
3. To record the payment of Credit Association to concerned parties
Credit Association Payable----------------550
Cash------------------------------------------550
4. To record the payroll and withholding tax to the inland revenue authority:
Income Tax Payable---------------------4,797.69
Pension Contribution Payable----------2,971.80
Cash-----------------------------------------7,769.49

40 | P a g e
 Level Three: Worksheet Five

Project One: Monitor and Control Accounts Receivable

Hidase Trading distributes electronic parts. Most transactions with customers are immediately
paid with cash or check. But, Hidase has five customers that have established accounts. These
approved customers routinely buy on credit. The terms of credit agreement provide that payment
within 30 days and each customer has a maximum credit term of Birr 30,000.

The following information for May regarding each of credit customers:

1. Customer #1: Beginning balance birr 4,209. Purchase on account on May 5 birr 21,711
and payment on account on May 17, birr 4,209.
2. Customer #2: Beginning balance birr 15,825. Purchase on account on May 15, birr 6,825
and payment on account on May 26, birr 12,825.
3. Customer #3: Beginning balance birr 0. Purchase on account on May 15, birr 6,825 and
purchase on account on May 9, birr 28,630.
4. Customer #4: Beginning balance birr 22,671. Purchase on account on May 7 birr 6,300
and purchase on account on May 22, birr 28,332 and payment on account on May 11,birr
22,671.
5. Customer #5: Beginning balance birr 8,970 and payment on account on May 28 birr
8,970.

Required:
1. Prepare subsidiary accounts receivable ledger account for each Hidase’s customers.
2. Prepare the general ledger accounts receivable control account. Be sure that in this
account reconciles to the sum of the individual balances in the subsidiary ledgers.

Project Two: Process Financial Transactions and Prepare Financial Reports

The following business transactions were completed by SABA Consulting Company as of June
of the 2007.

June 2: Saba transferred birr 50,000 cash from a personal bank account to an account to be used
for the business.
June 3: Hired an administrative assistance, to be paid birr 6,000 per month and rented office
house birr 12,000.
June 8: Purchased (and immediate used) office supplies on account for birr 1,500.
June 9: Received birr 5,000 from customer for service provided.
June 12: Paid birr 2,400 for transportation costs.
June 13: Provided service on account to Guna Plc birr 6,000.
June 15: Paid birr 3,000 to administrative assistant for Salary.
June 20: Purchased computer furniture for birr 8,000, paid birr 2,000 on cash, the remianing
amount on account.
June 24: Paid birr 1,500 on the open account relating to June 8.

41 | P a g e
June 28: Paid birr 3,000 to administrative assistant for salary.
June 30: Paid office rent birr 2,000.
June 30: Paid cash for miscellaneous expense birr 1,250.

SABA Consulting uses the following accounts:

 Cash
 Accounts receivables
 Equipment
 Accounts payable
 Owner’s equity
 Revenues
 Salary expense
 Rent expense
 Travel expense
 Supplies expense
 Miscellaneous expense

Required:
1. Journalize the listed transactions
2. Prepare a Trial balance as of June 30.

Project Three: Bank Reconciliation Process

On May 31,2007, the cash in bank account of Nardos Company had a balance of Birr
4,671.88. On that date, the bank statement indicated a balance of birr 11,705.52. Comparison
of returned checks and bank advices revealed the following:
1. Deposit in transit May 31 totaled birr 1,786.
2. Outstanding checks May 31 totaled birr 3,067.24.
3. The bank added to the account birr 19.45 of interest earned by Nardos during May.
4. The bank collected birr 2,700 note receivables for Nardos and charged birr 10.
5. Bank service charges in addition to the collection fee, not yet recorded in the books, were
birr 12.
6. Accompanying the bank statement is a debit memorandum indicating that Sisay’s check
for birr 539 had been returned NSF, Sisay is a customer had sent the check to pay an
open account.
7. Nardos company recorded the payment of an payable as birr 431; the check was birr 314.
8. The bank erroneously charged a birr 375 check of Yordanos company against the Nardos
bank account.
9. Nardos company recorded birr 164.50 payment for repair as birr 16.45.
10. Nardos neglected to record birr 4,000 as a deposit.

42 | P a g e
 Required:
A. Prepare bank reconciliation for Nardos Company at May 31.
B. Prepare the general journal entries necessary to bring the cash bank account into
agreement the adjustment.

Project Four: Depreciation

Assume that Sure Construction Company purchased machinery for birr 100,000 on April 1,
2001 G.C. The machine has useful life of 5 years and salvage value of birr 10,000. The
accounting period of Sure Construction is from January 1 upto December 31.

Required:
Using straight line method calculates depreciation expense for:
1. 2001 G.C
2. 2002 G.C
3. 2003 G.C
4. 2004 G.C
5. 2005 G.C
6. 2006 G.C

Project Five: Process Payroll

SN Employee’s Name Basic Over time worked Allowances
Salary
1 Girmay Assefa 1,150 4 hrs Public Holiday (2.50) -
6 hrs Weekend (2.00)
2 Bereket Teklu 4,000 6 hrs Public Holiday (2.50) 450 Position Allowances
3 Yosef Gizachew 550 6 hrs Evening (1.25)
5 hrs Night (1.50)
4 hrs Weekend (2.00)
4 Atakliti Weldu 7,166 No 1,000 Position Allowances

500
House Allowances

Additional Information:
1. All employees are permanent except Yosef Gizachew and all worked 40 hrs per week.
2. During Sene, 2007 all workers have done as they have been expected.
3. Girmay Assefa monthly pay Br 400.00 from his salary for credit association.
4. Assuming that pension contribution 7% from Employee and 11% from Employer.
Required:
1. Prepare payroll register/sheet.
2. Prepare necessary journal entry for preparation of payroll and payments of deductions to
concerned party.

43 | P a g e
 Answer for Worksheet Five

Project One: Monitor and Control Accounts Receivable

Accounts Receivable Subsidiary Ledger

Customer #1
Date Ref Debit Credit Balance
May 1 4,209
May 5 21,711 25,920
May 17 4,209 21,711

Customer #2
Date Ref Debit Credit Balance
May 1 15,825
May 15 6,825 22,650
May 26 12,825 9,825

Customer #3
Date Ref Debit Credit Balance
May 1 0
May 9 28,630 28,630
May 15 6,825 35,455

Customer #4
Date Ref Debit Credit Balance
May 1 22,671
May 7 6,300 28,971
May 11 28,332 57,303
May 22 22,671 34,632

Customer #5
Date Ref Debit Credit Balance
May 1 8,970
May 28 8,970 0

44 | P a g e
General Ledger

Accounts Receivable No:_____________

Date Ref Debit Credit Balance

May 31 150,298 150,298
May 31 48,675 101,623

Project Two: Process Financial Transactions and Prepare Financial Reports

Journal Entries

June 2: Cash……………..50,000
Capital…………………..50,000
June 3: No Entry
June 8: Supplies Expense…………….1, 500
Accounts Payable……………….1, 500
June 9: Cash……………..5,000
Service Revenue……………5,000
June 12: Travel Expense………….2, 400
Cash…………………………2,400
June 13: Accounts Receivable…………6,000
Service Revenue……………………6,000
June 15: Salary Expense……………3,000
Cash……………………………3,000
June 20: Equipment………………….8,000
Cash…………………………….2,000
Accounts Payable………………6,000
June 24: Accounts Payable………….1,500
Cash……………………………1,500
June 28: Salary Expense……………..3,000
Cash……………………………3,000
June 30: Rent Expense………………2,000
Cash…………………………..2,000
June 30: Miscellaneous Expense……….1,250
Cash……………………………1,250

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 Task 2: Transactions are posted to the ledger (Posting)
Cash 6,000
50,000 2,400
5,000 3,000 Rent Expense
2,000 2,000
1,500
3,000 2,000
2,000
1,250
Supplies Expense
55,000 15,150
1,500
39,850
A/Receivable 1,500
6,000
Travel Expense
2,400
6,000
2,400
Equipment
8,000 Miscellaneous Expense

8,000

A/Payable
1,500 1,500
6,000

1,500 7,500
6000

Capital
50,000

50,000
Service Revenue
5,000
6,000
11,000
Salary Expense
3,000
3,000

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 1,250

1,250

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 Task 3: Preparing Trial Balance
Saba Consulting Company
Trial Balance
For the Year Ended June 30, 2007

Account Title Dr Cr
Cash 39,850
Accounts Receivable 6,000
Equipment 8,000
Accounts Payable 6,000
Capital 50,000
Service Revenue 11,000
Salary Expense 6,000
Rent Expense 2,000
Travel Expense 2,400
Supplies Expense 1,500
Misc. Expense 1,250
Total 67,000 67,000

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 Level Three: Worksheet Six

Project One: Process Transactions and Prepare Financial Statements

Beka Authorized Accounting Firm is a sole proprietorship owned by Beka Abdeta and providing
accountancy services to its clients.
The account balance of the business as of November 1, 2015 is shown as follows:
Account Title Amount in Birr
Cash 50,000
Accounts Receivable 25,000
Supplies 2,500
Office Equipment 15,500
Accounts Payable 5,000
Beka, Capital 88,000

During the month of November 2015, the business has made the following transactions:
Date of Transactions occurred during the month
Transaction
November 02 Paid one year office rent of Birr 24,000 for the business starting from
November 1, 2015.
November 12 Provided accountancy service to ABC Company for Birr 15,000 on account.
November 15 Purchased Stationary materials (supplies) for Birr 2,500 on account.
November 16 AtoBeka has withdrawn Birr 2,600 for his personal consumption.
November 17 Provided accountancy service to Langano Trading for Birr 10,000 on cash.
November 22 Paid salary of Birr 13,500 for its employees.
November 28 Partially collected Birr 12,000 from ABC Company for the service rendered
on account on November 12, 2015.
Additional Information
Office Supplies on hand at the end of the month worth Birr 3,500.

Required Tasks:
Task 1.1: Pass journal entries for the above transactions.
Task 1.2: Post the entries to T-accounts.
Task 1.3: Prepare unadjusted trial balance on November 30, 2015.
Task 1.4: Pass the adjusting entries and post them on November 30, 2015.
Task 1.5: Prepare adjusted trial balance on November 30, 2015.
Task 1.6: Prepare the Income Statement and Balance Sheet.

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Project Two: Prepare Bank Reconciliation and Transaction Recording
Robe Company’s bank statement dated Dec 31, 2015 shows a balance of Br 24,500. The
company’s cash records on the same date show a balance of Br 23,090. Following additional
information is available:
1. Following checks issued by the company to its customers are still outstanding:
No. 846 issued on Nov 29 Br 320
No. 875 issued on Dec 26 50
No. 878 issued on Dec 28 275
No. 881 issued on Dec 29 185
2. Robe Company made payment of Br 250 for utilities through Automatic Teller Machine
(ATM), but failed to record on its cash book.
3. A deposit of Br 400 made on Dec 31 does not appear on bank statement.
4. An NSF check of Br 600 was returned by the bank with the bank statement.
5. The bank charged Br 50 as service fee.
6. The bank collected a note receivable on behalf of the company. Amount received by the
bank on the note was Br 1,800. This includes Br 300 interest income. On this transaction,
bank charged a collection fee of Br 10.
7. A deposit of Br 430 was incorrectly entered as Br 340 in the company’s cash records.

Required Tasks:
Task 2.1: Prepare a bank reconciliation statement using the above information.
Task 2.2: Journalize the necessary entries.
Project Three: Process Applications for Credit and Foreign Currency Transactions
Assume that you are an employee of Commercial Bank of Ethipia and assigned in credit section
in order to process customers’ credit application and handle foreign currency requests.
Accordingly, you are required to perform the following tasks:
Task 3.1: Alpha Hotel is a four star hotel established in Addis Ababa for the providing hotel
services to its customers. The Hotel wants to establish a credit relationship with your bank. But
before that, the Hotel wants necessary information about your section. What information do you
provide for the Hotel?
Task 3.2: Based on your information, the Hotel has decided to apply a Hotel and Tourism Term
Loan and asks you the required documents that should be attached with the credit application.
What information do you provide for its request?
Task 3.3: The Hotel has fulfilled the required documents and your bank has approved a term
loan of Birr 2,500,000.00 to be repaid in one year at lump sum with an annual interest rate of
12%. Calculate the total amount (principal plus interest) to be repaid by the Hotel.
Task 3.4: The Hotel also required €65,000 Euro from your bank for importing furniture and
equipment to increase customer satisfaction. Calculate the amount of money that is required by
the Hotel in terms of Ethiopian Birr.

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 The buying and selling rate of the bank on the date transaction took place can be given as
follows:
Foreign Currency Buying Rate Selling Rate
Euro 20.6515 21.4500

Project Four: Process Payroll

Balema Trading is one of a merchandising firm established for the purchase and sale of cereals in
Adama Town. The following data shows a sample of employees of the firm and their earnings
for the month of October, 2015:
Employee Namo of Basic OT Worked Duration of Overtime OT Rate
ID Employee Salary Hours Work
01 KeneniLemmi 6,500 10 6:00 – 10:00PM 1.25
02 Samuel Bekele 4,400 10 10:00PM – 12:00PM 1.50
03 AdmasuLeta 2,800 4 Weekend 2.00
04 AberaMekasha 850 - - -

Additional Information
1. All employees are permanent.
2. Samuel is a member of saving and credit association of the firm and saves 10% of his basic
salary.
3. Each employee is entitled for desert allowance of 20% of his/her basic salary.
4. The firm expects every employee to work 166 hours per month.
5. Pension contribution rate:
 From Employer 11%
 From Employee 7%
Required Tasks:
Task 4.1: Prepare payroll register for the month of October, 2015.
Task 4.2: Record the necessary journal entries for payment of salary for the month of October,
2016.
Task 4.3: What is the accounting period for the payment of withholding employment income tax
for the month of October, 2015?

Answer for Worksheet Six

Project One
Task 1.1: Journal Entries
November 02: Prepaid Rent-------24,000
Cash----------------------24,000
November 12: Accounts Receivable-------15,000
Service Revenue--------------15,000
November 15: Supplies----------2,500
Accounts Payable--------2,500

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November 16: Drawings-------------2,600
Cash-----------------------------2,600
November 17: Cash--------------10,000
Service Revenue--------10,000
November 22: Salary Expense----------13,500
Cash---------------------------13,500
November 28: Cash-------------------12,000
Accounts Receivable---------12,000

Task 1.2: Posting to the Ledger

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Task 1.3: Unadjusted Trial Balance

Beka Authorized Accounting Firm

Unadjusted Trial Balances
For the month ended November 30, 2015
Account Title Dr Cr
Cash………………………………………31,900
Accounts Receivable……………….……28,000
Supplies…………………………………..5,000
Prepaid Rent………………………….….24, 000
Office Equipment……………………..…15,500
Accounts Payable……………………………………………………...………7,500
Beka, Capital…………………………………………………………………88,000
Drawings………………………..……….2, 600
Service Revenue………………………………………………………………25,000
Salary Expense…………………..……...13, 500
Total 120,500 120,500

Task1.4: Adjusting Entries

1. Supplies Expenses-------1,500
Supplies---------------------------1,500
(5,000 – 3,500)
2. Rent Expense---------2,000
Prepaid Rent----------------2,000
(24,000/12 = 2,000x1 = 2,000)
Task 1.5: Adjusted Trial Balance
Beka Authorized Accounting Firm
Adjusted Trial Balances
For the month ended November 30, 2015
Account Title Dr Cr
Cash………………………………………31,900
Accounts Receivable……………….……28,000
Supplies…………………………………..3,500
Prepaid Rent………………………….….22,000
Office Equipment……………………..…15,500
Accounts Payable………………………………………………………………7,500
Beka, Capital………………………………………………………..…………88,000
Drawings………………………..……….2, 600
Service Revenue………………………………………………………………25,000
Salary Expense…………………..……...13, 500
Supplies Expense…………………………1,500
Rent Expense…………………………….2,000
Total 120,500 120,500
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Task 1.6: Preparing Financial Statements
Beka Authorized Accounting Firm
Income Statements
For the month ended November 30, 2015
Revenues:
Service Revenue………………………………………………………..25,000
Expenses:
Salary Expense…………………..……...13, 500
Supplies Expense…………………………1,500
Rent Expense…………………………….2,000
Total Expenses…………………………………………………………17,000
Net Income………………………………………...……………………8,000

Beka Authorized Accounting Firm

Statements of Owner’s Equity
For the month ended November 30, 2015
Beginning Capital……………………………………………………..88,000
Net Income…………….8,000
Less: Drawings………..2,600
Increases in Owner’s Equity…………………………………………5,400
Ending Capital………………………………………………………93,400

Beka Authorized Accounting Firm

Balance Sheet
November 30, 2015
Assets

Cash…………………………………………………31,900
Accounts Receivable…………………………..……28,000
Supplies………………………………………….…..3,500
Prepaid Rent……………………………………..….22,000
Office Equipment………………………………...…15,500
Total Assets…………………………………….….100,900
Liabilities
Accounts Payable……………………………..……7,500
Owner’s Equity
Beka, Capital…………………………………..…..93,400
Total Liabilities and Owner’s Equity………….… 100,900

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Project Two: Bank Reconciliation

Robe Company
Bank Reconciliation
December 31, 2015
Balance Per Bank Statement………………………………………….………….24,500
Add: Deposit in Transit………………………………………………….…..…….400
Subtotal……………………………………………………………………..……24,900
Deduct: Checks Outstanding:
Ck No. 846……………………..………..320
Ck No. 875………………………………..50
Ck No. 878……………………..………..275
Ck No. 881……………………….……..185 830
Adjusted Balance ……………………………………………………………….24,070
Balance Per Depositor’s Record………………………………………………….23,090
Add: Notes plus Interest………………………………..…….1,800
Depositor error…………………………….……….……901,890
Subtotal……………………………………………………………………………24,980
Deduct: NSF Check……………………………………...600
ATM……………………………………….……250
Bank Service charge………….………….………60 910
Adjusted Balance ………………………………………………………………….24,070

Journal Entries
December 31, 2015:
Cash in Bank…………………………1,890
Notes Receivable……………………………….1, 500
Interest Income……………………..…………….300
Accounts Payable………………..…….…….……..90

December 31, 2015:

NSF Check……………………………….600
ATM……………………..…..…….…….250
Misc Adm. Expense………....…….……..60
Cash in Bank…………………………910

Project Three: Process Applications for Credit and Foreign Currency Transactions
Task 3.1
 General information on Credit policy of the bank.
 Types of loan or credit available in our bank.
 Interest rate on the types of each loan.
 Methods of payment (at a lump sum of periodic installment).
 Rules and regulations of the bank regarding credit.
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 Task 3.2:
 Security documents
 disclosure and associated documents
 approval of offer documents
Task 3.3
Interest = 2,500,000 x 12%= 300,000
Maturity Value = 2,500,000 + 300,000 = 2,800,000
Task 3.4
Euro 65,000 x 20.6515 = 1,342347.50

Project Four: Process Payroll

Balema Trading
Payroll Register
October 31,2015
S. Name Basic Deser Overti Gross Income Pension Cre Total Net Pay Sig
N Salary et me Earnings Tax Contri. dit Deducti n
Allow. As. on
01 Keneni 6,500 1,300 489.46 8,289.46 2,238.81 455 - 2,693.81 5,595.65
02 Samuel 4,400 880 397.59 5,677.59 1,324.66 308 440 2,072.66 3,604.93
03 Admas 2,800 560 134.94 3,494.94 638.74 196 - 834.74 2,660.20
u
04 Abera 850 170 - 1,020 105.50 59.50 - 165 855
Total 14,550 2,910 1,021.99 18,481.99 4,307.71 1,018.50 440 5,766.21 12,715.78
Journal Entries

1. To record the payment of Salary during October 31, 2015:

Salary Expense…………………..18,481.99
Income Tax Payable……………….…….4,307.71
Pension Contribution Payable…………...1,018.50
Credit Association Payable…………….…440
Cash…………………………………….12,715.78
2. To record the payroll tax expenses during October 31, 2015:
Payroll Tax Expense…………………1,600.50
Pension Contribution Payable…………...1,600.50
(14,550 x 11% = 1,600.50)

3. Credit Association Payable------------440

Cash…………………………………..440
4. To record the Payroll and Withholding Tax to the inland revenue authority:
Income Tax Payable……………….…….4, 307.71
Pension Contribution Payable…………...2,619.00
Cash………………………………….6,926.71

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 Level Three: Worksheet Seven

Project One: Bank Reconciliation Statement and Transaction

The bank statement for Geda Company for June 30, 2015, indicates a balance of birr 9,143.11.
All cash receipts are deposited each evening in a night depository, after banking hours. The
accounting records of the company indicate the following summary data for cash receipts and
payments for June:
Cash balance as of June 1, 2015------------------------------------- birr 3,943.50
Total cash receipts for June 2015-------------------------------------birr 28,971.60
Total amount of checks issued (payment) in June 2015-----------birr 28,388.85

Comparing the bank statement and the company’s records the following reconciling items were
identified:
A. The bank had collected for Geda Company birr 1,030 on a note left for collection. The
face amount of the note was birr 1,000.
B. Deposit in transit was birr 1,852.21.
C. Checks outstanding totaled birr 5,265.27.
D. A check written for birr 139 had been incorrectly charged by the bank as birr 157.
E. A check for birr 30 was wrongly recorded as birr 240 by the company. The check was for
the payment of accounts payable.
F. Bank Service Charge during the period is Br 18.20.
Instruction:
Task 1: Prepare bank reconciliation for June 2015.
Task 2: Journalize the entries that should be made by Geda Company.

Project Two: Process Payroll

ALSADDISS Company is one of the known textile manufacturing company in Oromia Regional
State at Adama Town. The company recently recruited new employees from accounting Level III
graduates who are competent in accounts budget support occupation. The company operates
based on Ethiopian tax regulations. The company pays salary always at the end of the month and
normally, the employees have to work 160 hours. The company provides the following
additional information on the payroll of the employees during the current month.
S. Name of Positions Basic Housing Allow. Representation Overtime work
N Employee Salary (Taxable) Allow(Nontaxable)
1 SemeretBelete G/Manager 7,800.00 1,800 1,500 -
2 ChaltuTolosa Supervisor 5,370.00 1,200 800 -
3 Kemal Bedri HR Manager 4,100.00 700 1,000 -
4 BeleteTeka Professionals 3,400.00 - - -
5 RahelDuguma Professionals 2,350.00 - - 20 public holidays
6 BeshaduChala Professionals 1,350.00 - - 20 hours(from 12:00
morning to 4:00 night)

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  All employees get 20% of their basic salary as non-taxable Deseret allowance.
 Pension contribution by the employee and employer is 8% and 10% respectively.

Required Tasks:
Task 1: Prepare this month payroll to ALSADDISS Company as of end of the month.
Task 2: Journalize the required entry on the pay day to employees.
Task 3: Pass the required entry when you pay the withholding.
Project Three: Process Transactions and Prepare Financial Statements
Koket Company is a sole proprietorship owned by Genet Lemecha and providing legal services
to its clients.
The beginning balance sheet on January 01, 2015 has shown the following balances:
Account Title Amount in Birr
Cash 50,000
Accounts Receivable 14,000
Office Equipment and 18,500
Furniture
Accounts Payable 7,000
Genet, Capital 75,500

During the month of January 2015, the business has made the following transactions:
Date of Transactions occurred during the month
Transaction
January 01 Paid six months house rent of Birr 6,000 for the business starting from
January, 2015.
January 03 Delivered legal serviceservice to Meseret for Birr 1,500 on account.
January 05 Purchased Stationary materials (supplies) for Birr 1,000 on account.
January 15 Genet has withdrawn Birr 800 for his personal consumption.
January 20 Delivered legal service to ALSADDISS PLC for Birr 15,000 on cash.
January 28 Paid salary of Birr 3,500 for its employees.
January 29 Collected Birr 800 from Meseret for the service rendered on account on
January 03.
Additional Information
1 Office Supplies on hand at the end of the month worth Birr 800.

Required Tasks:
Task 1: Pass journal entries for the above transactions.
Task 2: Post the entries to T-accounts.
Task 3: Prepare unadjusted trial balance on January 31, 2015.
Task 4: Pass the adjusting entries and post them on January 31, 2015.
Task 5: Prepare adjusted trial balance on January 31, 2015.
Task6: Prepare Interim Income Statement and Balance Sheet on January 31, 2015.
Task 7: Prepare post-closing Trial Balance.

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 Answer for Worksheet Seven

Project One: Bank Reconciliation

Geda Company
Bank Reconciliation
June 30, 2015
Balance Per Bank Statement………………………………………….………….9,143.11
Add: Deposit in Transit…………………….…..…….1, 852.21
Bank Error …………………………………..…18 1,870.21
Subtotal…………………………………………………………………….……11,013.32
Deduct: Checks out standings…………………………………………………..5,265.27
Adjusted Balance ……………………………………………………………….5,748.05

Balance Per Depositor’s Record………………………………………………….4,526.25

Add: Notes plus Interest………………………………..…….1, 030
Depositor Error…………………………………………210 1,240
Subtotal……………………………………………………………………………5,766.25
Deduct:Bank Service Charge………………………………………………………18.20
Adjusted Balance ……………………………………………………………….5,748.05

Journal Entries
June 30, 2015:
Cash in Bank…………………………1,240
Notes Receivable…………………………….1,000
Interest Income……….………………………..30
Accounts Payable……………….…………….210

June 30, 2015:

Misc Admin Expense……………..18.20

Cash in Bank…………………………….18.20

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 Project Two: Process Payroll
ALSADDIS COMPANY
Payroll Register
For the month of ……..
S. Name Basic OT Gross Income Pens.Co Total Net Pay Sig
N Salary Allowances Earning Tax nt Ded.
HA RA DA

01 Semret 7,800 1800 1500 1560 0 12,660 2,697.50 624 3,321.50 9,338.50
02 Chaltu 5,370 1200 800 1074 0 8,444 1,637.00 429.60 2,066.60 6,377.40
03 Kemal 4,100 700 1000 820 0 6,620 1,027.50 328 1,355.50 5,264.50
04 Belete 3,400 - - 680 0 4,080 445.00 272 717.00 3.363
05 Rahel 2,350 - - 470 734.38 3,554.38 536.10 188 724.10 2,830.28
06 Besha 1,350 - - 270 210.94 1,830.94 194.69 108 302.69 1,528.25
Total 24,370 3,700 3,300 4,874 945.32 37,189.32 6,537.79 1,949.60 8,487.39 28,701.93

Journal Entries
1. To record the payment of Salary during 20xx
Salary Expense…………………..37,189.32
Income Tax Payable……………….…….6, 537.79
Pension Contribution Payable…………...1,949.60
Cash……………………………………...28,701.93

2. To record the payroll tax expenses during 20xx

Payroll Tax Expense…………………2,437
Pension Contribution Payable…………...2,437
(24,370 x 10% = 2,437)

3. To record the Payroll and Withholding Tax to the inland revenue authority:
Income Tax Payable……………….…….6, 537.79
Pension Contribution Payable…………...4,386.60
Cash……………………………………………..10,924.39

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Project Three
Task 1.1: Journal Entries
January 01: Prepaid Rent-------6,000
Cash----------------------------6,000
January 03: Accounts Receivable-------1,500
Service Revenue---------------------1,500

January 05: Supplies----------1,000

Accounts Payable--------1,000
January 15: Drawings-------------800
Cash-----------------------------800
January 20: Cash--------------15,000
Service Revenue--------15,000
January 28: Salary Expense----------3,500
Cash------------------------------3,500
January 29: Cash-------------------800
Accounts Receivable---------800
Task 1.2: Posting to the Ledger

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Task 1.3: Unadjusted Trial Balance
Koket Company
Unadjusted Trial Balances
For the month ended January 31, 2015

Account Title Dr Cr
Cash………………………………………55,500
Accounts Receivable……………….……14,700
Supplies…………………………………..1,000
Prepaid Rent………………………….….6, 000
Office Equipment……………………..…18,500
Accounts Payable………………………………………………………………8,000
Genet, Capital…………………………………………………………………75,500
Drawings………………………..……….8,000
Service Revenue………………………………………………………………16,500
Salary Expense…………………..……...3,500
Total 100,000 100,000

Task1.4: Adjusting Entries

1. Supplies Expenses-------200
Supplies---------------------------200
(1,000 – 800)
2. Rent Expense---------1,000
Prepaid Rent----------------1,000
(6,000/6 = 1,000x1 = 1,000)

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Task 1.5: Adjusted Trial Balance

Koket Company
Adjusted Trial Balances
For the month ended January 31, 2015

Account Title Dr Cr
Cash………………………………………55,500
Accounts Receivable……………….……14,700
Supplies…………………………………...800
Prepaid Rent………………………….….5, 000
Office Equipment……………………..…18,500
Accounts Payable………………………………………………………………8,000
Genet, Capital…………………………………………………………………75,500
Drawings………………………..……….8,000
Service Revenue………………………………………………………………16,500
Salary Expense…………………..……...3,500
Supplies Expense…………………………200
Rent Expense……………………………1,000
Total 100,000 100,000

Task 1.6: Preparing Financial Statements

Koket Company
Income Statements
For the month ended November 30, 2015
Revenues:
Service Revenue………………………………………………………..25,000
Expenses:
Salary Expense…………………..……...13, 500
Supplies Expense…………………………1,500
Rent Expense…………………………….2,000
Total Expenses…………………………………………………………17,000
Net Income……………………………………… ……………………8,000

Koket Company
Statements of Owner’s Equity
For the month ended November 30, 2015
Beginning Capital……………………………………………………..88,000
Net Income…………….8,000
Less: Drawings………..2,600
Increases in Owner’s Equity…………………………………………5,400
Ending Capital………………………………………………………93,400

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 Koket Company
Balance Sheet
November 30, 2015
Assets
Cash…………………………………………………31,900
Accounts Receivable…………………………..……28,000
Supplies………………………………………….…..3,500
Prepaid Rent……………………………………..….22,000
Office Equipment………………………………...…15,500
Total Assets…………………………………….….100,900
Liabilities
Accounts Payable……………………………….……7,500
Owner’s Equity
Beka, Capital…………………………………......…..93,400
Total Liabilities and Owner’s Equity…………...… 100,900

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