1B 4. C 7. C? 10. C 14.

2. D 5. D 8.A 11. C 13. B

3.C 6. B 9. B 12. D 15. B

Part Two:

Identify the list of Accounts as Assets, Liabilities, Owner’s Equity and also state their normal balance
(the increasing side of the respective accounts)

Accounts Type of Account Normal Balance (increasing side)

Supplies Asset Debit

Notes Payable Liability Credit

Service Revenue Revenue Credit

Dividends Equity Debit

Accounts Payable Liability Credit

Salaries Expense Expense Debit

Common Stock Equity Credit

Accounts Receivable Asset Debit

Notes Receivable Asset Debit

Equipment Asset Debit

1. Use the following information to calculate for the year ended December 31, 20XX
(a) net income (net loss), (b) ending retained earnings and (C)total assets.
Calculation for the year ended December 31, 20XX:

(a) Net Income (Net Loss) = Revenue - Expenses

= $19,000 - $10,000

= $9,000

(b) Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends

= (-$10,000) + $9,000 - $6,000

= -$7,000
(c) Total Assets = Cash + Accounts Receivable + Supplies + Equipment + Notes Receivable

= $15,000 + $4,000 + (-$1,500) + $9,500 + $1,000

= $27,000

3.Journalize the following business transactions in general journal form. Identify each
transaction by number.
Jan. 1, Owners invest $40,000 in cash in starting a real estate office operating as a
corporation.
Jan. 5. Purchased $500 worth of supplies on credit.
Jan. 10, Purchased equipment for $25,000, paying $3,500 in cash and signed a 30-day,
$21,500, note payable.
Jan. 15, Real estate sales to customers on account totaled $4,000.
Jan. 20, Paid $700 in cash for the current month's rent.
Jan. 25, Paid $250 cash on account for office supplies purchased in transaction 2.
Jan. 28, Received a bill for $800 for advertising for the current month.
Jan. 31, Paid $2,500 cash for office salaries.
Jan. 31, Paid $1,200 cash dividends to stockholders.
Jan. 31, Received a check for $2,000 from a client in payment on account on Jan 15.

Example:

Jan 1 Cash………………………………………….40,000

Capital……………………………………………40,000
Journalizing the transactions:

1. Jan 1:

Cash | $40,000

Capital | $40,000

2. Jan 5:

Supplies | $500

Accounts Payable | $500

3. Jan 10:

Equipment | $25,000

Cash | $3,500

Notes Payable | $21,500

4. Jan 15:

Accounts Receivable | $4,000

Service Revenue | $4,000

5. Jan 20:

Rent Expense | $700

Cash | $700

6. Jan 25:

Accounts Payable | $250

Cash | $250
7. Jan 28:

Advertising Expense | $800

Accounts Payable | $800

8. Jan 31:

Salaries Expense | $2,500

Cash | $2,500

9. Jan 31:

Dividends | $1,200

Cash | $1,200

10. Jan 31:

Cash | $2,000

Accounts Receivable | $2,000