Q1: Alsafi Company entered into these transactions during May 2017, its first month ofoperations.
1. Shareholders invested SR 70,000 in the business in exchange for common stock of the
company .
2. Purchased land for the production site for SR 45,000 from on account.
3. Paid SR 7,000 cash for rent expense.
4. Sold products (Milk and Butter) to Panda worth SR 10,000 on account.
5. Performed computer services to Lawton Construction Company for 5,000 cash.
6. Paid Southern States Power Co. SR 8,000 cash for energy usage in May.
7. Paid liability for purchasing land in (2).
8. Received SR 10,000 cash from Panda in (4).
Required:
Using the following tabular analysis, show the effect of each transaction on the accounting
equation. Ignore the explanation.
Assets
Cash
1
2
3
4
5
6
7
8
Land
Account receivable
Liabilities
Account payable
Stockholders’ Equity
Revenue Expense
Common Stock
s
s
Templates
Alsafi Company
General Journal for the month of May 2017
Account / Description
Debit
Date
May
1
2
3
4
5
6
7
8
Credit
GENERAL LEDGER
Cash
Date
Explanation
Debit
Credit
100
Balance
Explanation
Debit
Credit
110
Balance
Explanation
Debit
Credit
120
Balance
Credit
140
Balance
Credit
200
Balance
May
Accounts Receivable
Date
May
Account payable
Date
May
Revenues
Date
Explanation
Debit
May
Expenses
Date
May
Explanation
Debit
Trail Balance
Debit
Credit
$
$
Q2: Prepare adjusting entries for the year ended December 31, for each of these separate
situations. Assume that prepaid expenses are initially recorded in asset accounts and that
fees collected in advance are initially recorded as liabilities.
a. The Prepaid Rent account has a debit balance of $12,000 before adjustment, representing a
prepayment for four months’ rent made on December 1 of the current year.
b. One-third of the work related to $18,000 of cash received in advance was performed during
this period.
c. Unpaid accrued salaries at December 31 amounts to $15,000
d. Work was completed for a client on December 31 in the amount of $21,000, but was not
previously billed or recorded.
e. Estimated depreciation on office equipment is $27,000.
Account
Dr.
Cr.
Q3: The Adjusted Trial Balance of Auburn Company is entered on the partial work sheet
below. Complete the work sheet by extending the account balances into the appropriate
financial statement columns and by entering the amount of net income for the reporting
period (Prepare Income statement and balance sheet)
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