BA-2201 Introduction to Accounting Tutorial (1) Exercise

Amalina Isa
Ex 1-3
Chalet Sports sells hunting and fishing equipment and provides guided hunting
and fishing trips. Chalet Sports is owned and operated by Cliff Owen, a wellknown sports enthusiast and hunter. Cliffs wife, Judy, owns and operates Joliet
Boutique, a womens clothing store. Cliff and Judy have established a trust fund
to finance their childrens college education. The trust fund is maintained by City
Bank in the name of the children, John and Morgan.
For each of the following transactions, identify which of the entities listed should
record the transaction in its records.
Entities
C

Chalet Sports

City Bank Trust Funds

Joliet Boutique

None of the above

1. Cliff paid a local doctor for his annual physical, which was required by the
workmens compensation insurance policy carried by Chalet Sports.
2. Cliff received a cash advance from customers for a guided hunting trip.
3. Judy paid her dues to the YCWA.
4. Cliff paid a breeders fee for an English springer spaniel to be used as a
hunting guide dog.
5. Judy deposited a $3500 personal check in the trust fund at City Bank.
6. Cliff paid for an advertisement in a hunters magazine.
7. Judy authorized the trust fund to purchase mutual fund shares.
8. Judy donated several dresses from inventory for a local charity auction for
the benefit of a womens abuse shelter.
9. Cliff paid for dinner and a movie to celebrate their 15 th wedding
anniversary.
10.Judy purchased two dozen spring dresses from a Seattle designer for a
special spring sale.
Ex 1-9
Describe how the following business transactions affect the 3 elements of the
accounting equation.
a.
b.
c.
d.
e.

Invested cash in business in exchange for share capital-ordinary.

Received cash for services performed.
Paid for utilities used in the business.
Purchased supplies for cash.
Purchased supplies on account.

Ex 1-10
a. A vacant lot acquired for $75,000 is sold for $145,000 in cash. What is the
effect of the sale on the total amount of the sellers (1) assets, (2)
liabilities, and (3) stockholders equity (retained earnings)?
b. Assume that the seller owes $40,000 on a loan for the land. After receiving
the $145,000 cash in (a), the seller pays the $40,000 owed. What is the
effect of the payment on the total amount of the sellers (1) assets, (2)
liabilities, and (3) stockholders equity (retained earnings)?
PR1-5A
Colfax Dry Cleaners is owned and operated by Maria Acosta. A building and
equipment are currently being rented, pending expansion to new facilities. The
actual work of dry cleaning is done by another company at wholesale rates. The
assets, liabilities, and share capital-ordinary of the business on November 1,
2010 are as follows :
Cash, $8,500 ; Accounts Receivable $15,500 ; Supplies, $1,600 ; Land, $18,000;
Accounts Payable, $5,200 ; Share Capital Ordinary, $15,000. Business
transactions during November are summarized as follows :
a. Maria Acosta invested additional cash in the business with a deposit of
$30,000 in exchange for share capital- ordinary.
b. Purchased land for use as a parking lot, paying cash of $22,000.
c. Paid rent for the month, $3,000.
d. Charged customers for dry cleaning revenue on account, $12,350.
e. Paid creditors on account, $4,950.
f. Purchased supplies on account, $1,550.
g. Received cash from cash customers for dry cleaning revenue, $17,900.
h. Received cash from customers on account, $13,200.
i. Received monthly invoice for dry cleaning expense for November (to be
paid on December 10), $7,880.
j. Paid the following : wages expense, $5,100 ; truck expense, $1,200 ;
utilities expense, $800; miscellaneous expense, $950.
k. Determined that the cost of supplies on hand was $1,275 ; therefore, the
cost of supplies used during the month was $1,875.
l. Paid dividends, $5,000.
Instructions
1. Determine the amount of retained earnings as of November 1.
2. State the assets liabilities and stockholders equity as of November 1 in
equation form similar to that shown in this chapter. In tabular form below
the equation indicate increases and decreases resulting from each
transaction and the new balances after each transaction.
3. Prepare a statement of comprehensive income for November, a statement
of retained earnings for November, and a statement of financial position
as of November 30.
4. (Optional) Prepare a statement of cash flows for November.