Accounting I   © 2008 Tibebe S. Mengistu

Assignments for Principles of Accounting I Chapter 3

Assignment One

Prepare journal entries and post to T-accounts the following transactions of Albert Smith - a realtor.
a) Acquired office supplies of $700 on open account. Use a Supplies Inventory account.
b) Sold a house and collected a $9,000 commission on the sale. Use a Commissions Revenue account.
c) Paid cash of $700 to a local newspaper for current advertisements.
d) Paid $600 for a previous credit purchase of office supplies.
e) Recorded office supplies used of $300.

Assignment Two
Callaway Gardens a retailer of garden supplies and equipment had the accompanying balance sheet accounts, December 31, 20X7.
Cash $22,000
Accounts Receivable 37,000
Inventory 131,000
Prepaid rent 4,000
Store equipment $60,000
Less: Accumulated depreciation 24,000 36,000
Total $230,000

Liabilities and Stockholders' Equity
Accounts payable $111,000
Paid-in capital 40,000
Retained income 79,000
Total $230,000

Following is a summary of transactions that occurred during 20X8:
a) Purchase of merchandise inventory on open account, $550,000.
b) Sales, all on credit, $800,000.
c) Cost of merchandise sold to customers, $440,000.
d) On June 1, 20X4, borrowed $80,000 from a supplier. The note is payable at the end of 20X8. Interest is payable yearly on
December 31 at the rate of 15% per annum.
e) Disbursed $25,000 the rent of the store. Add to Prepaid Rent.
f) Disbursed $165,000 for wages through November.
g) Disbursed $76,000 for miscellaneous expenses such as utilities, advertising and legal help.
h) On July 1, 20X8, lent $20,000 to the office manager. He signed a note that will mature on July 1, 20X9, together with
interest at 10% per annum. Interest for 20X8 is due on December 31, 20X8.
i) Collections on accounts receivable, $691,000.
j) Payments on accounts payable $471,000.
k) Previous rent payments applicable to 20X9 amounted to $3,000.
l) Depreciation for 20X8 was $6,000.
m) Wages earned by employees during December were paid on December 31, $6,000.
n) Interest on the loan from the supplier was disbursed.
o) Interest on the loan made to the office manager was received.

1. Prepare journal entries in thousands of dollars.
2. Post the entries to the ledger, keying your posting by transaction letter.
3. Prepare a trial balance, December 31, 20X8.