UN

Question 1- Suppose you have been given a job as an Accounting Clerk in a r

that most of the companies customers pay immediately for services rendered w
cash customers, while $25,000 is owed by other customers for services render
under the cash basis and accrual basis of accounting for the period in question

Answer-
Cash basis lets businesses record income and expenses only when cash is
is because using this basis of accounting you must only record actual cash rec
customers make the actual payment.

Accrual accounting involves tracking income and expenses as they are incurre
Under the Accural basis your total revenue recognised will be $55000 for the p
assess the financial position at the given period of time.

Complete the missing information in the various columns of the worksheet below

Answers highlighed-
Account Titile Unadjusted Trial Balance Adjustments
DR CR DR
Cash 2065
Accounts Receivable 2220 500
Supplies 2000
Funiture 14200
Prepaid Insurance 985
Accounts Payable 1260
Salary Payable 4000
Owner Capital 11000
Owner Withdrawal 2000
Service Revenue 14340
Salary Expense 8275
Supplies Expense 1600 1240
Insurance Expense 800 100
Utilities Expense 455
32600 32600
Accumulated
Depreciation Furniture
Depreciation Expense 360
2200
 UNIT 3 WORKSHEET
Accounting Clerk in a retail store and have been asked by the manager for advice on an accounting
for services rendered while a few pay sometime later. As at December 31st, 2013 the company coll
mers for services rendered within the same period. Advice the manager how much should be recorde
or the period in question.

enses only when cash is actually received or paid. Under the Cash basis the total recorded as Reven
y record actual cash received for your services rendered. The balance of 25000 owing can only be re

nses as they are incurred (when an invoice is sent or a bill received) instead of when money actually
will be $55000 for the period. Using the Accural basis all transaction whether cash or credit will be re
.

orksheet below

Adjustments Adjusted Trial Balance

CR DR CR
2065
2720
1240 760
14200
100 885
1260
4000
11000
2000
500 14840
8275
2840
900
455

360 360
 360
2200 33460 33460
T
for advice on an accounting issue. You were told
31st, 2013 the company collected $30,000 from its
how much should be recorded as service revenue

the total recorded as Revenue will be $30000 this

25000 owing can only be recorded once these

ead of when money actually changes hands.

ether cash or credit will be recoded in the books to
 Question 3

Blum Services
Worksheet as at 20xx
Account Titile Unadjusted Trial Balance
DR CR
Cash 12900
Prepaid Insurance 2000 b.
Office Supplies 1300
Office Equipment 10500
Acc. Depreciation -Equipment 3500
Accounts Payable 2900
Salary Payable
Unearned Service Revenue 4500
A.L Blum Capital 11750
A. L Blum Withdrawal 5600
Service Revenue 13350
Salary Expense 3700
Depreciation Expense d.
Supplies Expense
Insurance Expense
36000 36000
lum Services
rksheet as at 20xx
Adjustments Adjusted Trial Balance
DR CR DR CR
12900
325 1675
1050 a. 250
10500
1800 5300
2900
900 d. 900
2000 c. 2500
11750
5600
2000 15350
900 4600
1800 1800
1050 1050
325 325
6075 6075 38700 38700
 Question 4

Revenues - Expenses = Net income

Deavours Photography
Income Statement as at 31,Dec,2012
Revenues;
Service revenue

Expense;
Salaries Expense $ 4,600.00
Depreciation Expense $ 1,000.00
Supplies Expense $ 400.00
Insurance expense $ 2,000.00
Total Expense
Net income

Assets = Liabilities + Owners Equity

Deavours Photography
 Balance Sheet as at 31, Dec 2012.
Assets
Cash $ 2,000.00
Prepaid Insurance $ 2,000.00
Office Supplies $ 600.00
Office Equipment $ 16,000.00
Less Accumulated Depreciation -$ 3,000.00
Total Assets $ 17,600.00

Liabilities
Salaries Payable $ 900.00
Unearned Service Revenue $ 2,500.00
Account Payable $ 5,000.00
Total Liabilities $ 8,400.00
Owners Equity
C.Devours, Capital 31,Dec,2012 $ 9,200.00
Total Liabilites + Owners Equity $ 17,600.00
 Accumulated depreciation is the total amount of depreciation expense allocated t
since the asset was put into use. It is a contra-asset account – a negative asset a
the balance in the asset account it is normally associated with.

Is Accumulated Depreciation a Credit or Debit? Accumulated depreciation is a

balance. Although it is reported on the balance sheet under the asset section, ac
depreciation reduces the total value of assets recognized on the financial statem
natural debit accounts.

Beginners owners equity + Contrubutions + Net Income - Withdrawls = Ending Own

hy Deavours Photography
Dec,2012 Statement of Owners Equity as at 31,Dec

$ 15,350.00 C.Devours, Capital 01,Dec,2012

Owner Investment
Net income

Less Withdrawls
Drawings
C.Devours, Capital 31,Dec,2012
$ 8,000.00
$ 7,350.00

hy
Dec 2012.
ciation expense allocated to a specific asset
ccount – a negative asset account that offsets
ed with.

mulated depreciation is a natural credit

under the asset section, accumulated
ed on the financial statement since assets are

e - Withdrawls = Ending Owners Equity

Photography
Equity as at 31,Dec,2012

$ 7,450.00
$ -
$ 7,350.00
$ 14,800.00

-$ 5,600.00
$ 9,200.00
Question 5

Required;
i) Prepare Noteworthy’s classified balance sheet in report form
assets, total liabilities and owner’s equity.

Noteworthy Communications
Balance Sheet as at 31/Dec/20X6.
Assets
Cash $ 16,500.00
Prepaid Rent $ 6,600.00
Supplies $ 2,500.00
Prepaid Insurance $ 1,100.00
Account Receivable $ 6,600.00
Other Assets $ 3,600.00
Computers $ 22,700.00
Equipment $ 114,400.00
Less Accumulated Depreciation
-Computers -$ 11,600.00
-Equipment -$ 37,800.00
Total Assets $ 124,600.00

Liabilities
Interest Payable $ 600.00
Unearned Service Revenue $ 5,400.00
Other Current Liability $ 4,700.00
Salary Payable $ 3,900.00
Note Payable $ 27,800.00
Account Payable $ 15,100.00
Total Liabilities $ 57,500.00

Owners Equity
Lori Stone, Capital $ 67,100.00
Total Liabilites + Total Owners Equity $ 124,600.00
sified balance sheet in report form as at December 31, 20X6.Show totals for total
er’s equity.

X6.
1, 20X6.Show totals for total
 Question 6
The trial balance of Lane’s Interiors at May 31, 20X8, follows.
Lane’s Interiors Trial Balance May 31, 20X8

Lane's Interiors
Worksheet 31/May/20X8
Account Titile Unadjusted Trial Balance
DR CR
Cash 4300
Notes Receivable 10300
Interest Recievable h.
Furniture 27400
Land 18700
Building 53900
Prepaid Insurance 1700 d.
Supplies 500
Office Equipment
Acc. Depreciation - Building 34500
Acc. Depreciation - Furniture 1400
Accounts Payable 14700 g.
Interest Payable e.
Salary Payable b.
Unearned Service Revenue 8800 f.
Note Payable ,Long term 18700
A.L Blum Capital 29900
A. L Blum Withdrawal 3800
Service Revenue 16800
Interest Revenue
Salary Expense 2100
Insurance Expense
Interest Expense
Utilities Expense 1100
Advertising Expense 1000 g.
Supplies Expense
Depreciation Expense- Building a.
Depreciation Expense- Furniture a.
124800 124800
e's Interiors
et 31/May/20X8
Adjustments Adjusted Trial Balance
DR CR DR CR
4300
10300
200 200
27400
18700
53900
300 1400
100 c. 400

400 34900
 500 1900
100 14800
200 200
600 600
4400 4400
18700
29900
3800
4400 21200
200 200
600 2700
300 300
200 200
1100
100 1100
100 100
400 400
500 500
6800 6800 126800 126800