DIRE DAWA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE
PRINCIPLES OF ACCOUNTING I
INDIVIDUAL ASSIGNMENT ON CHAPTER 2 ACCOUNTING CYCLE FOR SERVICE
GIVING BUSINESSES
TARGET GROUP MANAGEMENT 1ST YEAR 3RD SEMISTER WEEKNED SEC 1 AND
EVENING SEC 2 STUDENTS
SUBMISSION DATE: 18/01/2012 E.C
COPYING FROM YOUR FRIENDS DISQUALIFY RESULTS
QUESTION 1

On July 1, 2016, Lemlem established an interior decorating business, Photogenic Designs. During
the month, Lemlem completed the following transactions related to the business:
July 1. Lemlem transferred cash from a personal bank account to an account to be used for the
business, ETB 18,000.
4. Paid rent for period of July to end of month, ETB 1,750.
10. Purchased a truck for ETB 15,000, paying ETB 1,000 cash and giving a note payable for
the remainder.
13. Purchased equipment on account, ETB 7,000.
14. Purchased supplies for cash, ETB 1,200.
15. Paid annual premiums on property and casualty insurance, ETB 2,700.
15. Received cash for job completed, ETB 7,500.
21. Paid creditor a portion of the amount owed for equipment purchased on July 13, ETB 2,500.
24. Recorded jobs completed on account and sent invoices to customers, ETB 8,600.
26. Received an invoice for truck expenses, to be paid in August, ETB 800.
27. Paid utilities expense, ETB 900.
27. Paid miscellaneous expenses, ETB 315.
29. Received cash from customers on account, ETB 3,600.
30. Paid wages of employees, ETB 2,400.
31. Withdrew cash for personal use, ETB 2,000.

Required:
1) Journalize each transaction in a two – column journal.

11 Cash 41 Fees Earned

12Accounts Receivable 51 Wages Expense
13 Supplies 53 Rent Expense
14 Prepaid Insurance 54 Utilities Expense
16 Equipment 55 Truck Expense
18 Truck 59Miscellaneous Expense
21 Notes Payable
22 Accounts Payable
31 Lemlem, Capital
32 Lemlem, Drawing

2) Post the journal entries to a ledger. (Use T – Accounts)

3) Prepare an unadjusted trial balance for Photogenic Designs as of July 31, 2016

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QUESTION 2

The unadjusted trial balance of Fix – It Co. at February 28, 2016, the end of the current year, is
shown below.
Fix – It Co.
Unadjusted Trial Balance
February 28, 2016
Debit Credit
Balances Balances
11 Cash 3,950
13 Supplies 15,295
14 Prepaid Insurance 2,735
16 Equipment 100,650
17 Accumulated Depreciation – 21,209
Equipment
18 Trucks 36,300
19 Accumulated Depreciation – Trucks 7,400
21 Accounts Payable 4,015
31 Salem, Capital 72,426
32 Salem, Drawing 5,000
41 Service Revenue 119,950
51 Wages Expense 39,925
53 Rent Expense 10,600
55 Truck Expense 7,350
59 Miscellaneous Expense 3,195 ______
225,000 225,000

The data needed to determine year – end adjustments are as follows:

a) Supplies on hand at February 28 are ETB 4,000.
b) Insurance premiums expired during year are ETB 2,000.
c) Depreciation of equipment during year is ETB 6,000.
d) Depreciation of trucks during year is ETB 3,500.
e) Wages accrued but not paid at February 28 are ETB 450.

Required:
1) Enter the unadjusted trial balance on an end – of – period spreadsheet (work sheet)
and complete the spreadsheet.
2) Journalize the necessary adjusting entries.
3) Prepare an income statement, a statement of owner’s equity (no additional
investments were made during the year), and a balance sheet.
4) Journalize the closing entries.
5) Prepare a post – closing trial balance.

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