PRINCESS SUMAYA UNIVERSITY FOR TECHNOLOGY

The King Talal Faculty for Business and Technology

Chapter 2 worksheet

1. Transactions for Tom Petty Company for the month of October are presented
below. Journalize each transaction and identify each transaction by number. You may
omit journal explanations.
1. Issued ordinary shares in exchange for $50,000 cash.
Cash................................................................................................. 50,000
Share Capital-Ordinary............................................................
50,000

2. Purchased land costing $28,000 for cash.

Land.................................................................................................. 28,000
Cash........................................................................................
28,000

3. Purchased equipment costing $20,000 for $3,000 cash and the remainder on
credit.

Equipment........................................................................................ 20,000
Cash........................................................................................
3,000
Accounts Payable....................................................................
17,000

4. Purchased supplies on account for $800.

Supplies ........................................................................................... 800
Accounts Payable ................................................................... 800

5. Paid $1,000 for a one-year insurance policy.

Prepaid Insurance............................................................................ 1,000
Cash........................................................................................
1,000

6. Received $3,000 cash for services performed.

Cash................................................................................................. 3,000
Service Revenue.....................................................................
3,000

7. Received $4,000 for services previously performed on account.

Cash................................................................................................. 4,000
Accounts Receivable...............................................................
4,000

8. Paid salaries to employees for $2,500.

Salaries and Wages Expense.......................................................... 2,500
Cash........................................................................................
2,500
9. Paid dividends of $1,000.
Dividends.......................................................................................... 1,000
Cash 1,000

2. M. Caria and Associates is a financial planning service. The account balances at

December 31, 2017 are shown by the following alphabetical list:
Accounts Payable $ 13,000
Accounts Receivable 19,000
Buildings 120,000
Cash 26,500
Equipment 71,000
Land 42,000
Notes Payable 95,000
Notes Receivable 8,100
Share Capital-Ordinary 179,700
Supplies 1,100

Instructions
Prepare a trial balance with the accounts arranged in proper order.

M. CARIA AND ASSOCIATES

Trial Balance
December 31, 2017
Debit
Credit
Cash................................................................................................. $ 26,500
Accounts Receivable........................................................................ 19,000
Supplies............................................................................................ 1,100
Notes Receivable............................................................................. 8,100
Equipment........................................................................................ 71,000
Buildings........................................................................................... 120,000
Land.................................................................................................. 42,000
Accounts Payable............................................................................. $
13,000
Notes Payable..................................................................................
95,000
Share Capital-Ordinary.....................................................................
179,700
Totals....................................................................................... $287,700
$287,700

3. The following are all of the accounts of Ali Company that have a balance at the end
of August. All accounts have normal balances:

$27,00 Cash $36,00 Accounts receivable

0 0
5,000 Advertising expense 59,000 Equipment
31,000 Accounts payable 75,000 Service revenues
24,000 Ali, Withdrawals 3,600 Rent expense
30,000 Salaries expense 1,500 Office supplies.
58,100 Ali, Capital. 22,000 Notes payable

a. Calculate net profit.

b. Determine the amount of owner's equity to be shown on the August 31 statement of
financial position.
Service revenues earned $75,000 A.
Rent expense (3,600)
Advertising expense (5,000)
Salaries expense (30.000)
Net profit $36,400
ALI, Capital (beginning) $58,100 B.
Net profit 36,400
ALI, Withdrawals (24.000)
ALI, Capital (ending) $70,500