Group Assignment

Group
Assignment

Semester : Autumn 2017 Exam Date: 26/10/2017

Course Code : ACCT 101 Course Title: Principles of Accounting
Assessment : Group assignment Faculty: Dr. Ahmed

Student Name: Muhammed Ahmed Al Khateri Student ID: 171039

Student Name: Muhammed Musalam Student ID: 171009

Student Name: Madhab Kandel Student ID: 171047

Student Name: Khaled Al Saedi Student ID: 171054

Student Name: _________________________ Student ID: ______________________

Grading Scheme:

Question Maximum Marks Marks Awarded CLO

1 9 3
2 9 4
3 7 4

Total Marks: 25
Question 1) Mr. Omar, former Head of Marketing department at Dubai Islamic Bank, wants
to know the basic steps in the accounting cycle. Identify and discuss the steps in accordance
to the sequence in which they occur. (9 marks)

 Analyzing and Classify Data about an Economic Event

Identifying the transactions from the events is the first step of accounting process. Events are analyzed to find
the impact on the financial position or to be more specific the impacts on the accounting equation.
Documents such as; a receipt, an invoice, a depreciation schedule, and a bank statement etc. provides evidence
that an economic event has actually occurred.

 Journalizing the transaction

Transactions having an impact on the financial position of a business are recorded in the general journal.
In the general journal, the transactions are recorded as a debit and a credit in monetary terms with the date
and short description about the cause of the particular economic event.

 Posting from the Journals to the General Ledger

Transactions recorded in the general journal are then posted to the general ledger accounts. The
accounts classify accounting data into certain categories and they are recorded in general journal entries
according to that classification.
Depending on the frequency of the transactions posting to ledger accounts may be less frequent.

 Preparing the Unadjusted Trial Balance

To determine the equality of debits and credits as recorded in the general ledger, an unadjusted is prepared. It
is a way to investigate and find fault or prove correctness of the previous steps before proceeding to the next
step.
Unadjusted trial balance makes the next steps of accounting process easy and provides the balances of all the
accounts that may require adjustment in the next step. Unadjusted balance sheet is for internal use only.

 Recording Adjusting Entries

Adjusting entries ensure that the revenue recognition and matching principles are followed. To find the
revenues and expenses of an accounting period adjustments are required.
Adjusting entries are required to be is because a transaction may have influence revenues or expenses beyond
the current accounting period and to journalize to the events that not yet recorded.

 Preparing the Adjusted Trial Balance

An adjusted trial balance contains all the account titles and balances of the general ledger which is created
after the adjusting entries for an accounting period have been posted to the accounts.
It is an internal document and is not a financial statement. It helps to create the income statement and balance
sheet and doesn’t provide enough information for preparing the cash flow statement.

 Preparing Financial Statements

Financial statements are prepared from the balances from the adjusted trial balance. The financial statements
are made at the very last of the accounting period.
Cash flow statement, income statement, balance sheet and statement of retained earnings; are the financial
statements that are prepared at the end of the accounting period. This is the output of the accounting process.

 Recording Closing Entries

At the end of an accounting period Closing entries are made to transfer data in the temporary accounts to the
permanent balance sheet or income statement accounts.
Transferring the balances of the temporary accounts or nominal accounts (e.g. revenue, expense, and drawing
accounts) to owner’s equity or retained earnings account is used because these types of accounts only affect
one accounting period.

 Preparing a Closing Trial Balance

To make sure that debits equal credits, final trial balance is prepared. As the temporary ones have been closed
only the permanent accounts appear on the closing trial balance to make sure that debits equal credits.

 Recording Reversing Entries

Posit closing entries is an optional step of accounting cycle. A reversing journal entry is recorded on the first
day of the new period for avoiding double counting the amount when the transaction occurs in the next
period.
Question 2) Alhikma services, Ltd was established on June 1, 2017. The following are
transactions took place during the first month. You are requested to journalize each
transaction and identify each transaction by number. (9 marks)

1. The company issued ordinary shares in exchange for $90,000 cash.

Account title Debit Credit
Cash Account dr 90000

Common Stock cr 90000

2. The company acquired land costing $28,000 for cash.

Account title Debit Credit
Land Account dr 28000

Cash Account cr 28000

3. The company purchased equipment costing $20,000 for $3,000 cash and the remainder on
credit
Account title Debit Credit
Equipment dr 20000

Cash Account cr 3000

Account Payable 17000

4. The company purchased supplies on account for $800.

Account title Debit Credit

Supplies Account Dr. 800

Account payable Cr. 800

5. The company paid $1,000 for a one-year insurance policy.
Account title Debit Credit
Prepaid Insurance Dr. 1000

Cash Account Cr. 1000

6. The company received $3,000 cash for services performed.

Account title Debit Credit
Cash Account Dr. 3000

Service Revenue Cr. 3000

7. The company received $4,000 for services previously performed on account.

Account title Debit Credit
Cash Account Dr. 4000

Account Receivables Cr. 4000

8. The company paid salaries to employees for $2,500.

Account title Debit Credit
Salaries Expense Dr. 2500

Cash Account Cr. 2500

9. The company paid dividends of $1,000.

Account title Debit Credit

Dividend Account Dr. 1000

Cash Account Cr. 1000

Question 3) The general journal below shows the transactions of the Alhekma Company. You
are requested to post the journal entries from general journal to the general ledger. After all
entries have been posted, prepare a trial balance on the form provided. (4+3=7 marks)

General Journal J1
—————————————————————————————————————————
Date Account Titles and Explanation Ref. Debit Credit
—————————————————————————————————————————
2017
Sept. 1 Cash 35,000
Share Capital-Ordinary 35,000
(Issued ordinary shares for cash)

4 Equipment 30,000
Cash 10,000
Notes Payable 20,000
(Paid cash and issued 2-year, 9%, note for
equipment)

8 Rent Expense 1,000

Cash 1,000
(Paid September rent)

15 Prepaid Insurance 400

Cash 400
(Paid one-year liability insurance)

18 Cash 2,500
Service Revenue 2,500
(Received cash for delivery services)

20 Salaries and Wages Expense 500

Cash 500
(Paid salaries for current period)

25 Utilities Expense 600

Accounts Payable 600
(Received a bill for September utilities)

30 Dividends 1,800
Cash 1,800
(Paid dividends)

30 Accounts Receivable 2,000

Service Revenue 2,000
(Billed customer for delivery service)
 General Ledger

Cash Account No. 101

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance

—————————————————————————————————————————
Sept. 1 Share Capital Ordinary $ 35000 $ 35000

Sept. 4 Equipment $ 10000 $ 25000

Sept. 8 Rent Expenses $ 1000 $ 24000

Sept.15 Prepaid Insurance $ 400 $ 23600

Sept. 18 Service Revenue $ 2500 $ 26100

Sept. 20 Salaries and Wages Expense $ 500 $ 25600
Sept. 30 Dividend $ 1800 $ 23800

Accounts Receivable Account No. 112

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance

—————————————————————————————————————————
Sept. 30 Service Revenue $ 2000 $ 2000

Prepaid Insurance Account No. 130

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance

—————————————————————————————————————————
Sept. 15 Cash $ 400 $ 400

Equipment Account No. 155

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance
—————————————————————————————————————————
Sept. 4 Cash $ 10000 $10000
Sept. 4 Notes Payable $ 20000 $ 30000
 Accounts Payable Account No. 201
—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance

—————————————————————————————————————————
Sept. 25 Utilities Expense $ 600 $ 600

Notes Payable Account No. 205

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance

—————————————————————————————————————————
Sept. 4 Equipment $ 20000 $ 20000

Share Capital-Ordinary Account No. 311

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance

————————————————————————————————————————
Sept. 1 Cash $ 35000 $ 35000

Dividends Account No. 332

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance
—————————————————————————————————————————
Sept. 30 Cash $1800 $ 1800
 Service Revenue Account No. 400
—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance

—————————————————————————————————————————
Sept. 18 Cash $ 2500 $ 2500

Sept. 30 Account Receivable $ 2000 $ 4500

Rent Expense Account No. 719

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance

—————————————————————————————————————————
Sept. 8 Cash $1000 $1000

Salaries and Wages Expense Account No. 726

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance
—————————————————————————————————————————
Sept. 20 Cash $ 500 $500

Utilities Expense Account No. 735

—————————————————————————————————————————
Date Explanation Ref. Debit Credit Balance
—————————————————————————————————————————
Sept. 25 Account Payable $ 600 $ 600
 Alhekma Company
Trial Balance
September 30, 2017
—————————————————————————————————————————
Accounts Debit Credit
—————————————————————————————————————————
Cash $ 23800

Account Receivable $ 2000

Prepaid Insurance $ 400

Equipment $ 30000

Accounts Payable $ 600

Notes Payable $ 20000

Share Capital Ordinary $ 35000

Dividend $ 1800
Service Revenue $ 4500

Rent Expense $ 1000

Salaries and Wages $ 500

Utilities Expenses $ 600

—————————————————————————————————————————
Total: $ 60100 $ 60100

End of the questions