Financial Accounting I for Economics

Seminar 2
Homework
Contents

• Exercise 2.6
• Exercise 2.7
• Exercise 2.17
• Exercise 3.5
• Exercise 3.6
• Exercise 4.7
• Exercise 4.17
Exercise 2.6
• E2.6 Lennon Industries had the following transactions:
1. Borrowed €5,000 from the bank by signing a note.
2. Paid €3,900 cash for a computer.
3. Purchased €650 of supplies on account.

Instructions:
a) Indicate what accounts are increased and decreased by each transaction.
b) Journalize each transaction.
Solutions:
Exercise 2.7
E2.7 Ong Enterprises had the following selected transactions:
1. Shareholders invested $40,000 cash in the business in exchange for ordinary shares.
2. Paid office rent of $8,400.
3. Performed consulting services and billed a client $52,000
4. Declared and paid a $7,500 dividend

Instructions:
a) Indicate the effect each transaction had on the accounting equation
(Assets = Liabilities + Equity), using plus and minus signs.
b) Journalize each transaction.
 Exercise 2.7
Instructions:
a) Indicate the effect each transaction had on the accounting equation
(Assets = Liabilities + Equity), using plus and minus signs.
b) Journalize each transaction.

Solutions:
 Exercise 2.17
E2.17 (LO2,3,4) Beyers Security provides security services. Selected transactions for Beyers are presented
below.
Oct. 1 Received $66,000 cash in the business in exchange for ordinary shares.
Oct. 2 Hired part-time security consultant. Salary will be $2,000 per month. First day of work will be
October 15.
Oct. 4 Paid one month of rent for building for $2,000.
Oct. 7 Purchased equipment for $18,000, paying $4,000 cash and the balance on account.
Oct. 8 Paid $500 for advertising.
Oct. 10 Received bill for equipment repair cost of $390.
Oct. 12 Provided security services for event for $3,200 on account.
Oct. 16 Purchased supplies for $410 on account
Oct. 21 Paid balance due from October 7 purchase of equipment
Oct. 24 Received and paid utility bill for $148
Oct. 27 Received payment from customer for October 12 services performed.
Oct. 31 Paid employee salaries and wages of $5,100.
Instructions:
a) Journalize the transactions. Do not provide explanations.
b) Post the transactions to T-Accounts.
c) Prepare a trial balance at October 31, 2025 (Hint: Compute ending balances of T-Accounts first).
 a) journal entries
Journal entries
 a) journal entries
Journal entries
b) T-accounts
b) T-accounts
 Trial Balance
Trial Balance Beyer Security (October 31, 2025)
Description Debet Credit
Exercise 3.5
E3.5 (LO1,2,3) Yilmaz A.S. encounters the following situations:
1. Yilmaz collects $1,300 from a customer in 2025 for services to be performed in 2026.
2. Yilmaz incurs utility expense which is not yet paid in cash or recorded.
3. Yilmaz’s employees worked 3 days in 2025 but will not be paid until 2026.
4. Yilmaz performs services for customers but as not yet received cash or recorded the transactions.
5. Yilmaz paid $2,800 rent on December 1 for the 4 months starting December 1.
6. Yilmaz received cash for future services and recorded a liability until the service was performed.
7. Yilmaz performed consulting services for a client in December 2025. On December 31, it had not
billed the client for services provided of $1,200.
8. Yilmaz paid cash for an expense and recorded an asset until the item was used up.
9. Yilmaz purchased $900 of supplies in 2025; at year-end, $400 of supplies remain unused.
10.Yilmaz purchased equipment on January 1, 2025; the equipment will be used for 5 years.
11.Yilmaz borrowed $12,000 on October 1, 2025, signing an 8% one-year note payables.
Exercise 3.4
E3.5 (LO1,2,3) Yilmaz A.S. encounters the following situations:
Instructions:
Identify what type of adjusting entry (prepaid expense, unearned revenue, accrued expense,
or accrued revenue) is needed in each situation at December 31, 2025.
Solutions:

See next slide

 adjusting entries

Situation Adjustment
1
2
3
4
5
6
7
8
9
10
11
 Exercise 3.6
E3.6 (LO2,3) Hwang Ltd. has the following balances in selected accounts on December 31, 2025:
Accounts receivables NT$ -0-
All the accounts have
Accumulated Depreciation – Equipment NT$ -0-
Equipment NT$ 7,000 normal balances. The
Interest Payable NT$ -0- information below has
Notes Payable NT$ 10,000 been gathered at
Prepaid Insurance NT$ 2,100
December 31, 2025.
Salaries and Wages Payable NT$ -0-
Supplies NT$ 2,450
Unearned Service Revenue NT$ 32,000
1. Hwang borrowed NT$10,000 by signing a 9%, one-year note on September 1, 2025.
2. A count of supplies on December 31, 2025, indicates that supplies of NT$900 are on hand.
3. Depreciation on the equipment for 2025 is NT$1,000
4. Hwang paid NT$2,100 for 12 months of insurance coverage on June 1, 2025.
5. On December 1, 2025, Hwang collected NT$32,000 for consulting services to be performed from December 1,
2025, through March 31, 2025.
6. Hwang performed consulting services for a client in December 2025. The client will be billed NT$4,200.
7. Hwang pays its employees total salaries of NT$9,000 every Monday for the preceding 5-day week
(Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26.
All employees worked the last 3 days of 2025.
Exercise 3.5
E3.5 (Instructions:
Prepare annual adjusting entries for the seven items described above
Solutions:

1 5

2 6

3 7

4
 Post-closing Trial Balance Exercise 4.7
Account Titles Debit Credit
1 Cash 3,712
2 Accounts Receivable 3,904
3 Supplies 480
4 Accounts Payable 1,382
5 Unearned Service revenue 160
6 Share captial - Ordinary 4,100
7 Retained Earnings 1,660
8 Dividends 550
9 Service Revenue 4,300
10 Salaries and Wages Expense 1,260
11 Miscellaneous Expense 256
12 Supplies Expense 4,900
13 Salaries and Wages Payable 460
12,062 12,062
 Exercise 4.7

Instructions:
a) Prepare closing entries at June 30, 2025.
Solutions:

1 4

3
 Exercise 4.7
Instructions:
b) Prepare a post-closing trial balance

Post-closing Trial Balance

Account Titles Debit Credit
1
2
3
4
5
6
7
8
 Exercise 4.17
E4.17 (LO4) These financial statement items are for Basten Tax Services at year-end, July 31, 2025.

Salaries and wages payable £ 2,080 Notes payables (long-term) £ 1,800

Salaries and wages expenses 48,700 Cash 14,200
Utilities expense 22,600 Accounts receivable 9,780
Equipment 34,400 Accumulated depreciation – equipment 6,000
Accounts payable 4,100 Dividends 3,000
Service revenue 63,000 Depreciation expense 4,000
Rent revenue 8,500 Retained earnings (beginning of the year) 31,200
Share capital - ordinary 20,000

Instructions:
a) Prepare an income statement and a retained earnings statement for the year.
b) Prepare a classified statement of financial position at July 31.
 Exercise 4.17
Instructions:
a) Prepare an income statement and a retained earnings statement for the year.

Income Statement Basten Tax Services For the Year ended (Juli 31, 2020)
Revenues
a
b
Total revenues
Expenses
c
d
e
Total expenses
INCOME
 E4.17
Instructions:
a) Prepare an income statement and a retained earnings statement for the year.

Retained Earnings Statement Basten Tax Services For the Year Ended (Juli 31, 2020)
Retained earnings, per beginning of the Year
A
B
Retained earning, per end of the Year
 Exercise 4.17
Instructions:
b) Prepare a classified statement of financial position at July 31.

See next slide

 Exercise 4.17
Statement of Financial Position Basten Tax Services (July 31, 2020)
Assets
Property, plant & equipment a
b
Current assets c
d
Total Assets
Equity & Liabilities
Equity e
f
Total Equity
Non-current liabilities g
Current Liabilities h
i
Total Liabilities
Total Equity & Liabilities