Problem 1: Mr. Omar, former Head of Marketing department at Arab Bank, wants to know the basic steps in the accounting cycle. Discuss the first five steps in accordance to the sequence in which they occur.
Problem 2: Selected transactions for Mr. Ibrahim, civil engineer, in his first month of business, are as follows.
2 Jan Invested $100,000 cash in the business
2 Jan Purchased two service vehicles for cash at a cost of $24,000 each.
3 Jan Billed customers $6,800 for services performed.
3 Jan Purchased equipment for $50,000. Paid $10,000 cash, signed $40,000 note payable
9 Jan Paid $1,200 for a one-year insurance policy
11 Jan Purchased $5,000 office supplies (an asset) on credit
16 Jan Paid $350 cash for advertising.
20 Jan Received $5000 cash from customers billed on January 3.
29 Jan Paid for the office supplies on January 11
29 Jan Withdrew $2,300 cash from the business.
Required - Journalize the January transactions. You may omit journal explanations.
Problem 3: Selected transactions from the journal of Alhekma Company are presented below
|
Date
|
Account Titles and Explanation
|
Ref
|
Debit
|
Credit
|
|
Aug. 1
|
Cash
|
|
6,000
|
|
|
|
Owner's Capital (Owner's investment of cash in Business)
|
|
|
6,000
|
|
|
|
|
|
|
|
10
|
Cash
|
|
1,700
|
|
|
|
Service Revenue (Received cash for services performed)
|
|
|
1,700
|
|
|
|
|
|
|
|
12
|
Equipment
|
|
6,000
|
|
|
|
Cash
|
|
|
1,000
|
|
|
Notes Payable (Purchased equipment for cash and notes payable)
|
|
|
5,000
|
|
|
|
|
|
|
|
25
|
Accounts Receivable
|
|
2,500
|
|
|
|
Service Revenue (Billed clients for services performed)
|
|
|
2,500
|
|
|
|
|
|
|
|
31
|
Cash
|
|
1,500
|
|
|
|
Accounts Receivable (Receipt of cash on account)
|
|
|
1,500
|
Instructions:
a. Post the transactions to T accounts.
b. Prepare a trial balance at August 31, 2017.
Problem 4: Al Maha Hotel prepares monthly financial statements. Below are listed some selected accounts and their balances on December 30 trial balance before any adjustments have been made for the month of December.
AL MAHA HOTEL Trial Balance (Selected Accounts) December 31, 2020
|
|
Credit
|
|
|
Debit
|
|
|
Supplies
|
$3,200
|
|
|
Prepaid Insurance
|
3,600
|
|
|
Equipment
|
16,200
|
|
|
Accumulated Depreciation-Equipment
|
|
$1,000
|
|
Unearned Rent Revenue
|
|
1,200
|
|
Notes Payable
|
|
20,000
|
(Note: Debit column does not equal credit column because this is a partial listing of selected account balances)
An analysis of the account balances by the company's accountant provided the following additional information:
1. A physical count of supplies revealed $1,400 on hand on December 31.
2. A two-year life insurance policy was purchased on January 1 for $3,600.
3. The amount of rent received in advance that remains unearned at December 31 is $700.
4. Al Maha Hotel borrowed $20,000 by signing a 10%, one-year note on July 1, 2020.
5. Al Maha Hotel pays its employees total salaries of $11,000 every Monday for the preceding 5-day week (Monday-Friday). On Monday, December 27, 2020, employees were paid for the week ending December 24, 2020. All employees worked the five days ending December 31, 2020.
Instructions - Using the above additional information, record the adjusting entries that should be made by Al Maha Hotel on December 31.
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