University of South East Asia

2014-2015

Exercise Chapter 2
Exercise 1
Correct entries ( periodic inventory system ) the following mistake.
1- Purchase merchandise inventory on account $2,300.
Incorrect journal entries
Date
Account Name
Dr.
2011
Purchase
3,200
Oct. 12
A/P
2- Purchase machine on account $24,000.
Incorrect journal entries
Date
Account Name
2011
Purchase
Oct. 12
A/P

Dr.
24,000

3,200

Cr.
24,000

3- Sales merchandise inventory on account $2,500.

Incorrect journal entries
Date
Account Name
2011
Cash
Oct. 12
Sales
COGS
Inventory
4- Purchase furniture in cash $2,560.
Incorrect journal entries
Date
Account Name
2011
Cash
Oct. 12
Purchase

Dr.
2,500

Cr.
2,500

1,500
1,500

Dr.
5,260

Cr.
5,260

5- Paid insurance for one year $1,200.

Incorrect journal entries
Date
Account Name
2011
Insurance expense
Oct. 12
Cash

Dr.
1,200

Cr.
1,200

6- Collected cash from customer $1,600.

Incorrect journal entries
Date
Account Name
2011
Cash
Oct. 12
Sales

Lecturer: Hour Ry

Cr.

Dr.
6,100

Cr.
6,100

Exercise Financial Accounting

University of South East Asia

2014-2015

Exercise 2
Work Sheet
Account
Name

Unadjusted Trial

balance
Dr.
Cr.

Cash

5,000

A/R

3,400

Prepaid insurance

120

Prepaid rent

600

Inventory
Supply
Equipment

80

2,300
10,000

5,000
800
50

Utility expense

250

Repair expense

30

Dep. Exp. equi

Dep. Exp. furniture
Interest expense

22,7
50

Rent expense

Cr.

400
250
1,600
2,300
10,000
300
8,350

400
5,000
200
800
50
250
30

400
5,000
200
800
50
250
30

80
100
50
200

80
100
50
200

22,75
0
80
100
50
200

Interest payable
Insurance expense

Dr.
5,000
3,400
110
550
3,000
20
2,000
1,500

8,350

8,350

Advertising exp

Cr.

300

400
200

Dr.

250
1,600
2,300
10,000

300

Salary expense

Supply expense

50

200

Freight-out

Cr.

Balance
Sheet

400

1,600

Sales

Income
Statement

1,500

Ladys Capital

Total

100

300
1,500

Account payable

COGS

Dr.
5,000
3,400
110
550
3,000
20
2,000

2,000

Notes payable

Sales ret and all

Cr.

10
50

100

Acc. Dep. furniture

Ladys drawing

Dr.

3,000

Acc. Dep. equi

Furniture

Adjusted
Trial Balance

Adjustments

200

200

10
50

10
50
23,100

Total

200
10
50
7,220
1,130

23,100

Net income
TOTAL

8,350
1,130
$15,880

$15,880

Adjusting information
a- Supply on hand totaled $20.
b- Depreciation is $100 on the equipment and $50 on the furniture.
c- Interest of $200 is accrued on notes payable at October 31.
d- Insurance expired $10.
e- Rent expired $50.
1)-Complete the worksheet.
2)- Prepared income statement.
3)- Prepared Owners equity statement.
4)- Prepared balance sheet.
5)- Prepared closing entries.
6)-Prepared Post-trial balance.

Lecturer: Hour Ry

Exercise Financial Accounting

University of South East Asia

2014-2015

Exercise 3
The following merchandising transactions in the month of October. Old balance Cash $6,000
beginning inventory $4,000 and Capital $10,000.
Oct. 01- Purchased merchandise on account from X of $5,000, terms 2/10,n/60.
02- Sold merchandise on account $4,000, terms 2/10, n/30. The cost of the merchandise
sold was $2,000.
04- Purchase equipment on account $2,000. Useful life 2 years.
05- Received credit from X for merchandise returned $300.
07- Paid insurance $1,200 for one year.
09- Received collections in full, from customers billed on sales on October 2.
10- Paid to X in full amount.
11- Purchased Supplies for cash $200.
12- Purchased merchandise for cash $2,400.
15- Received refund for poor quality merchandise from supplier on cash purchase $330
on October 12.
17- Purchased merchandise from Y $3,000, FOB shipping point, terms 2/10, n/60.
19- Paid freight on October 17 purchase $50.
20- Paid in full amount on October 4.
24- Sold merchandise for cash $4,500. the merchandise sold had a cost of $3,000.
25- Purchased merchandise from Z. $3,000, FOB destination, terms 2/10, n/60.
27- Paid to Y in full amount.
28- Paid utility $200.
29- Made refunds to cash customers for defective merchandise $300. The returned
merchandise had a cost of $200 on October 24.
30- Paid salary to staffs $200
31- Sold merchandise on account $3,600, terms n/60. The cost of the merchandise sold
was $2,200.

Instructions
1-Journalize the transactions using a Perpetual inventory system.
2- Posting the transactions into Ledger.
3-Prepare trial balance October 31.
4-Prepare Financial statement October 31.
5-Closing entries
6-Post-closing trial Balance
Lecturer: Hour Ry

Exercise Financial Accounting

University of South East Asia

Lecturer: Hour Ry

2014-2015

10

Exercise Financial Accounting