Accounting Cycle worksheet

The following transactions are related to Ethio Mobile Maintenance (EMM) which is owned by Ato
Samuel, for the first month operation ended December 1, 2019
December 1: The following assets were invested to the business:
Cash............................................................................... Br 5,900.00
Supplies ......................................................................... 550.00
Land .............................................................................. 10,000.00
The liabilities transferred to the business was ............... 400.00
December 1: EMM paid a premium of Br 2,400 for insurance policy which will cover a 2 years period
December 1: EMM received Br 720 for renting the land for 3 months
December 2: EMM paid Br 800 for the rent of the month December.
December 5: EMM Purchased Office Equipment on account Br 7,000
December 7: EMM paid Br 180 for a daily news paper
December 11: EMM paid Br 400 to creditors
December 13: EMM paid receptionist and part-time assistant Br 1,250 for two weeks salary
December 16: EMM received Br 5,000 from revenues earned for the 1st half of the month
December 16: fees revenue on account totaled Br 1,750 for 1st half of the month
December 20: EMM paid Br 3,500 to creditors on the Br 7000 debt owed from the December 4
transaction
December 23: EMM Received Br 1,150 from customers in payment of their accounts
December 25: EMM purchased supplies for Br 1,450 in cash
December 27: EMM paid receptionist and part-time assistant Br 1,250 for two weeks salary
December 31: EMM paid Br 310 and Br 240 telephone and electric bill for the month, respectively
December 31: EMM received Br 2,750 from revenue earned for the second half of the month
December 31: fees revenue earned on account totaled Br 1,200 for the second half of the month
December 31: the owner withdrew Br 1,000 for his personal use
Additional Information:
o Assume that the balance of supplies on hand at the end of December 31 is 500
o Assume that December 1 is on Sunday with five working days i.e. Monday –Friday
o Assume that depreciation expense of office equipment for the month is 100
Required:
1. Prepare journal entries and post journalized transactions to ledger
2. Prepare unadjusted trial balance and journalize adjustments
3. Prepare working paper and financial statement
4. Journalize closing entries
5. Prepare post-closing trial balance

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 Answer
1. Preparation of journal entries
General Journal Page 1
Date Description P/R Debit Credit
2019
Dec. 1 Cash 5,900
Supplies 550
Land 10,000
Accounts Payable 400
Samuel, Capital 16,050
Investment by the owner
1 Prepaid Insurance 2,400
Cash 2,400
1 Cash 720
Unearned Rent 720
2 Rent Expense 800
Cash 800
5 Office Equipment 7,000
Accounts Payable 7,000
7 Miscellaneous Expense 180
Cash 180
11 Accounts Payable 400
Cash 400
13 Salary Expense 1,250
Cash 1,250
Dec. 16 Cash 5,000
Service Revenue 5,000
16 Fees Receivables 1,750
Service Revenue 1,750
20 Accounts Payable 3,500
Cash 3,500
23 Cash 1,150
Fees Receivables 1,150
25 Supplies 1,450
Cash 1,450
27 Salary Expense 1,250
Cash 1,250
31 Utilities Expense 550
Cash 550
31 Cash 2,750
Service Revenue 2,750
31 Fees Receivables 1,200
Service Revenue 1,200
31 Samuel, Drawing 1,000
Cash 1,000

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2. Posting journalized transactions to ledger
Account: Cash Account No. 11
Date Item P/R Debit Credit Balance
2019
Dec.1 5,900 5,900
2,400 3,500
720 4,220
800 3,420
180 3,240
400 2,840
1250 1,590
5000 6,590
3500 3,090
1150 4,240
1450 2,790
1250 1,540
550 990
2750 3,740
1000 2,740
Cash Account has a debit balance of Br 2,740.
Account: Accounts Receivables Account No. 12
Date Item P/R Debit Credit Balance
2019
Dec.1 1,750 1,750
1,150 600
1,200 1,800
Accounts Receivables General Ledger Account has a debit balance of Br 1,800

Account: Supplies Account No. 13

Date Item P/R Debit Credit Balance
2019
Dec. 1 550 550
1,450 2,000
Supplies General Ledger Account has a debit balance of Br 2,000

Account: Prepaid Account No.

Insurance 14
Date Item P/R Debit Credit Balance
2019
Dec. 1 2,400 2,400
Prepaid Insurance General Ledger Account has a debit balance of Br 2,400

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 Account: Equipment Account No. 15
Date Item P/R Debit Credit Balance
2019
Dec. 5 7,000 7,000
Equipment General Ledger Account has a debit balance of Br 7,000
Account: Land Account No.
Date Item P/R Debit Credit Balance
2019
Dec. 1 10,000 10,000
Land General Ledger Account has a debit balance of Br 10,000

Account: Accounts Payable Account No. 21

Date Item P/R Debit Credit Balance
2004
Dec. 1 400 400
7,000 7,400
400 7,000
3,500 3,500
Accounts Payable General Ledger Account has a credit balance of Br 3,500

Account: Unearned Rent Account No. 23

Date Item P/R Debit Credit Balance
2019
Dec. 1 720 720

Unearned Rent General Ledger Account has a credit balance of Br 720

Account: Samuel Capital Account No. 31

Date Item P/R Debit Credit Balance
2019 16,050
Dec. 16,050
Samuel Capital General Ledger Account has a credit balance of Br 16,050

Account: Samuel Drawing Account No 32

Date Item P/R Debit Credit Balance
2019 1000
Dec. 1000

Samuel Drawing General Ledger Account has a debit balance of Br 1000

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 Account: Service Revenue Account No. 41
Date Item P/R Debit Credit Balance
2019 5000
Dec. 2750
1200
2750 10,700
Service Revenue General Ledger Account has a Credit balance of Br 10,700

Account: Salary Expense Account No 51

Date Item P/R Debit Credit Balance
2019 1250
Dec. 1250
2500
Salary Expense General Ledger Account has a debit balance of Br 2500
Account: Rent Expense Account No.56
Date Item P/R Debit Credit Balance
2019 800
Dec. 800
Rent Expense General Ledger Account has a debit balance of Br 800
Account: Utilities Expense Account No 52
Date Item P/R Debit Credit Balance
2019 550
Dec. 550
Utilities Expense General Ledger Account has a debit balance of Br 550

Account: Miscellaneous
Expense Account No. 59
Date Item P/R Debit Credit Balance
2019 180
Dec. 180
Miscellaneous Expense General Ledger Account has a debit balance of Br 180

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3. Prepare trial balance

Ethio Mobile Maintenance

Trial Balance
December 31, 2019
Account Title Debit Credit
Cash 2,740
Account Receivables 1,800
Supplies 2,000
Prepaid Insurance 2,400
Office Equipment 7,000
Land 10,000
Account Payables 3,500
Unearned Rent 720
Samuel, Capital 16,050
Samuel, Drawing 1,000
Service Revenue 10,700
Salary Expense 2,500
Rent Expense 800
Utilities Expense 550
Miscellaneous Expense 180 _____
Total 30,970 30,970

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4. Journalize adjusting entries

General Journal Page

Date Adjusting Entries P/R Debit Credit
December 31 Supplies Expense 1,500.00
Supplies 1,500.00
31 Insurance Expense 100.00
Prepaid Insurance 100.00
31 Unearned Rent 240.00
Rent Income 240.00
31 Salary Expense 250.00
Salary Payable 250.00
31 Depreciation Expense 100.00
Accumulated Depreciation - E 100.00

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 5. Prepare worksheet

Ethiopia Mobile Maintenance

Work Sheet
For The Year Ended December 31, 2019
Balance
Trial Balance Adjustment Adjusted T B Income Statement Sheet
Title of Accounts Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 2,740 2,740 2,740
Account Receivables 1,800 1,800 1,800
Supplies 2,000 A)1,500 500 500
Prepaid Insurance 2,400 B) 100 2,300 2,300
Office Equipment 7,000 7,000 7,000
Land 10,000 10,000 10,000
Account Payables 3,500 3,500 3,500
Unearned Rent 720 C)240 480 480
Samuel, Capital 16,050 16,050 16,050
Samuel, Drawing 1,000 1,000 1,000
Service Revenue 10,700 10,700 10,700
Salary Expense 2,500 D)250 2,750 2,750
Rent Expense 800 800 800
Utilities Expense 550 550 550
Miscellaneous Exp. 180 _____ 180 180
30,970 30,970
Supplies Expense A)1,500 1,500 1,500
Insurance Expense B)100 100 100
Rent Income C)240 240 240
Salary Payable D)250 250 250
Depreciation Expense E) 100 100 100
Accum. Depreciation-Equip. ______ E) 100 ______ 100 100
2,190 2,190 31,320 31,320 5,980 10,940 25,340 20,380
Net Income 4,960 ______ ______ 4,960
10,940 10,940 25,340 25,340

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6. Prepare Financial statement
A. The Income Statement

Ethio Mobile Maintenance

Income Statement
For The Year Ended December 31, 2019
Revenues: In Birr In Birr
Service Revenue 10,700
Rent Income 240
Total Revenue 10,940
Expenses:
Salary Expense 2,750
Rent Expense 800
Depreciation Expense 100
Utilities Expense 550
Supplies Expense 1,500
Insurance Expense 100
Miscellaneous Expense 180
Total Operating Expense 5,980
Net Income 4,960

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 B. Statement of Owner’s Equity
Ethio Mobile Maintenance
Statement of Owner’s Equity
For the Year Ended December 31, 2019
Samuel, Capital December 1, 2019 Br 16,050
Add: Net Income (Net Loss) 4,960
Less: Withdrawal (1,000)
Net Increase In Capital 3,960
Samuel, Capital December 31, 2019 Br 20,010

C. The Balance Sheet

Ethio Mobile Maintenance

Balance Sheet
December 31, 2019
Assets: In Birr Liabilities and Capital: In Birr
Cash 2,740 Liabilities:
A/Receivables 1,800 Accounts Payable 3,500
Supplies 500 Salary Payable 250
Prepaid Insurance 2,300 Unearned Rent 480
Total Current Assets 7,340 Total Current Liabilities 4,230
Office Equipment: ................... 7,000 Long Term Liabilities 0.00
Less: Acc. Depreciation .......... (100) 6,900 Total Liabilities 4,230
Land 10,000 Capital:
Total Plant Assets 16,900 Samuel, Capital 20,010
Total Asset Br24,240 Total Liab. and Capital Br24,240

7. Journalize closing entries

General Journal Page
Date Closing Entries P/R Debit Credit
December 31 Service Revenue 10,700.00
Rent Income 240.00
Income Summary 10,940.00
31 Income Summary 5,980.00
Salary Expense 2,750.00
Rent Expense 800.00
Insurance Expense 100.00
Supplies Expense 1,500.00
Utilities Expense 550.00
Depreciation Expense 100.00
Miscellaneous Expense 180.00
31 Income Summary 4,960.00
Samuel, Capital 4,960.00
31 Samuel, Capital 1,000.00
Samuel, Drawing 1,000.00

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8. Prepare post-closing trial balance

Ethio Mobile Maintenance

Post-Closing Trial Balance
December 31, 2019
Account Title Debit Credit
Cash 2,740
Account Receivables 1,800
Supplies 500
Prepaid Insurance 2,300
Office Equipment 7,000
Accumulated Depreciation- Equipment 100
Land 10,000
Account Payables 3,500
Unearned Rent 480
Salary Payable 250
Samuel, Capital 20,010
Total 24,340 24,340

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