BSIT-EVENING

FINANCIAL ACCOUNTING
Assignment No.7
20-ARID-684
PROBLEMS -B

3.1-B
Answer: a.
NORTH ENTERPRISES
General Journal

Date Particular Dr. $ Cr. $

Apr 1 Cash 650,000
Capital Stock 650,000
Issued 10,000 Shares of Capital Stock.
Apr 6 Land 60,000
Office Building 240,000
Cash 100,000
Notes Payable 200,000
Purchased Land and Office Building.
Apr 10 Computer System 6,000
Cash 6,000
Purchased Computer System
Apr 12 Office Furnishings 12,000
Cash 1,000
Notes Payable 11,000
Purchased Office Furnishings.
Apr 20 Office Supplies 750
Cash 750
Purchased Office Supplies
Apr 25 Account Receivable 200
Computer System 200
Refund due from comp Central.
Apr 28 Accounts Payable 5,500
 Cash 5,500
Made Payment on Account Payable.
Apr 29 Cash 200
Account Receivable 200
Collected refund from comp Central.

b.

Transactio Assets $= Liabilities $+ Owner’s Equi

n
Apr 1 +Cash (650,000) 0 650,000
Apr 6 Land (60,000)
+ Office Building (240,000)
- Cash(100,000)
Notes Payable
0
200,000
Apr 10 +Computer System (6,000) 0 0
-Cash (6,000)
Apr 12 +Office Furnishings
-Cash (1,000)
Accounts Payable 11,000 0
Apr 20 +Office Supplies (750) 0 0
-Cash(750)
Apr 25 Accounts Receivable(200) 0 0
-Computer System(200)
Apr 28 -Cash(5,500)
Accounts Payable 5,500 0
Apr 29 +Cash(200) 0 0
-Account Receivable (200)

3.2-B
Answer:
a.
1. (a) The asset Accounts Receivable was increased. Increases in
assets are recorded by debits. Debit Accounts Receivable,
$5,000.
(b) Revenue has been earned. Revenue increases owners’
equity. Increases in owners’ equity are recorded by credits.
Credit Consulting
 Revenue $ 5,000.
2. (a) The asset Office Supplies was increased. Increases in assets
are recorded by debits. Debit Office Supplies, $3,200.
(b) The asset Cash was decreased. Decreases in assets are
recorded by credits. Credit Cash, $800.
(c) The liability Accounts Payable was increased. Increases in
liabilities are recorded by credits. Credit Accounts Payable,
$2,400.
3. (a) The liability Accounts Payable was decreased. Decreases in
liabilities are recorded by debits. Debit Accounts Payable, $100.
(b) The asset Office Supplies was decreased. Decreases in
assets are recorded by credits. Credit Office Supplies, $100.
4. (a) The asset Cash was increased. Increases in assets are
recorded by debits. Debit Cash, $5,000.
(b) The owners’ equity account Capital Stock was increased.
Increases in owners’ equity are recorded by credits. Credit
Capital Stock,
$ 5,000.
5. (a) The asset Cash was increased. Increases in assets are
recorded by debits. Debit Cash, $1,200.
(b) The asset Accounts Receivable was decreased. Decreases in
assets are recorded by credits. Credit Accounts Receivable,
$1,200.
6. (a) The liability Accounts Payable was decreased. Decreases in
liabilities are recorded by debits. Debit Accounts Payable, $2,300
($2,400- $100).
(b) The asset Cash was decreased. Decreases in assets are
recorded by credits. Credit Cash, $2,300.

7. (a) The Dividends account was increased. Dividends decrease

the owners’ equity account Retained Earnings. Decreases in
owners’ equity
are recorded by debits. Debit Dividends, $1,800.
(b) The asset Cash was decreased. Decreases in assets are
recorded by credits. Credit Cash, $1,800.

b.
 LYONS, INC.

General Journal

Date Particular Dr. $ Cr. $

June 1 Account Receivable 5,000
Consulting Revenue 5,000
Billed Customer For Service Rendered.
June 3 Office Supplies 3,200
Cash 800
Account Payable 2,400
Purchased Office Supplies
June 5 Account Payable 6,000
Office Supplies 6,000
Returned portion of office supplies Purchased June 30.
June 17 Cash 5,000
Capital Stock 5,000
Issued 1000 shares of capital stock at $5/share
June 22 Cash 1200
Account Receivable 1200
Received Partial payment for service billed on June 1.
June 29 Account Payable 2,300
Cash 2,300
Paid outstanding Balance Owed for office Supplies
Purchased on June 3.
June 30 Dividends 1,800
Cash 1,800
Declared and paid a cash Dividends

c. The realization principle requires that revenue be recorded

when it is earned, even if cash for the goods or services
provided has not been received.
d. The matching principle requires that expenses incurred in an
accounting period be matched with revenue earned in the same
period. Office supplies are recorded as an asset when they are
first purchased. As these supplies are used in a particular
accounting period, their cost will
be matched against the revenue earned in that period.

3.3-B
Answer:
 a.
DANA, INC.
INCOME STATEMENT:

Transactio Revenue- Expanse= Net income

n
Oct 1 NE I D
Oct 4 I NE I
Oct 8 I NE I
Oct 12 NE I D
Oct 20 NE NE NE
Oct 24 I NE I
Oct 25 NE NE NE
Oct 29 NE NE NE

DANA, INC.
BALANCE SHEET:

Transactio Assets= Liabilities+ Equity

n
Oct 1 D NE D
Oct 4 I NE I
Oct 8 I NE I
Oct 12 NE I D
Oct 20 NE NE NE
Oct 24 I NE I
Oct 25 D D NE
Oct 29 D NE D

b.

DANA, INC.

General Journal

Date Particular Dr. $ Cr. $

Oct 1 Rent Expanse 4,000
Cash 4,000
Paid October Rent.
Oct 4 Accounts Receivable 8,500
Service Revenue 8,500
 Billed Milton Hotel For Services
Oct 8 Cash 4,700
Service Revenue 4,700
Collected Cash from Dirt Valley Development for
Service Provided.
Oct 12 Advertising Expanse 320
Accounts Payable 320
Placed ad in the newspaper to be published on October
25. Total amount due in 30 days.

Oct 20 Cash 8,500

Accounts Receivable 8,500
Received payment from Milton Hotels for services billed
on Oct. 4.
Oct 24 Cash 300
Account Receivable 3,300
Service Revenue 3,600
Collected partial payment from Dudley Co. and billed
remainder.
Oct 25 Accounts Payable 320
Cash 320
Paid newspaper for advertisement.
Oct 29 Dividends 2,600
Cash 2,600
Declared and paid a cash dividend.

c. Three situations in which a cash payment does not involve an

expense include:
 The payment of a cash dividend.
 The payment of a liability for a previously recorded
expense.
 The purchase of an asset, including expenses paid in
advance such as insurance, rent, and advertising.