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Chapter 2: The Recording Process

The Rules Of Debit And Credit Balance Sheet Items


Note 1:
Before we go in depth into the recording process, it is important for us to
know the rules of debit and credit. This is to ensure that we record these
business transactions correctly.
Note 2:
In another word, a trial balance is prepared by listing the accounts balances
from the ledger, and the two totals, debits and credits side should equal.
Note 3:
As a summary, the recording process is the process of which we record the
business transactions by using an accounting procedure. Recording process
starts with recording in journal, posted to ledger and preparing the trial
balance. The process can be described as in Exhibit 7.
EXHIBIT 7: Recording Process
JOURNAL
LEDGER
TRIAL BALANCE

Note 4:
$ change to RM

ILLUSTRATIVE PROBLEM
Dr. Fared has been practicing as a cardiologist for three years. During April,
Dr. Fared completed the following transactions in his practice of cardiology.
April

1
3
5
8
12
17

Paid office rent for April, RM800.


Purchased equipment on account, RM2,100.
Received cash on account from patients, RM3,150.
Purchased X-ray film and other supplies on account, RM245.
Paid cash to creditors on account, RM1,250.
Paid cash for renewal of a six-month property insurance policy,

20
24

RM370.
Paid cash for laboratory analysis, RM545.
Paid cash from business bank account for personal and family

27

expenses, RM1,250.
Recorded the cash received in payment of services (on a cash

30
30
30

basis) to patients during April, RM1,720.


Paid salaries of receptionist and nurses, RM1,725.
Paid various utility expenses, RM360.
Recorded fees charged to patients on account for services

30

performed in April, RM5,145.


Paid miscellaneous expenses, RM132.

Dr. Fareds account numbers, titles, and balances as of April 1 (all normal
balances) are listed as follows:

No.
11
12
13
14
18
22

Titles

RM
Cash
4,123
Accounts Receivable 6,725
Supplies
290
Prepaid Insurance
465
Equipment
19,745
Accounts Payable
765

No.
32
41
51
53
55
56

Titles
Fared, Drawing
Professional Fees
Salary Expense
Rent Expense
Laboratory Expense
Utilities Expense

RM
0
0
0
0
0
0

31

Fared, Capital

30,583

59

Miscellaneous Expense

Required
a.

Record the April 1 balance of each account in the balance column of a


standard three-column account, write Balance in the item section, and
place a check mark () in the posting reference column. (It is advisable
to verify the equality of the debit and credit balances in the ledger
before proceeding with the next instruction.)

b.

Journalize the transactions for April in a general journal.

c.

Post to the ledger, extending the account balance to the balance column
after each posting.

d.

Prepare a trial balance as of April 30.

Solution
b.

General Journal
GENERAL JOURNAL

Date
20-April

Description

PAGE 27
Post.
Ref.

Debit

1 Rent Expense
Cash
Paid office rent for April

53
11

800

3 Equipment
Accounts Payable
Purchased equipment on account

18
22

2,100

5 Cash
Accounts Receivable
Received cash on account

11
12

3,150

8 Supplies
Accounts Payable
Purchased supplies

13
22

245

12 Accounts Payable
Cash
Paid creditors on account

22
11

1,250

17 Prepaid Insurance
Cash
Renewed 6-month property policy

14
11

370

20 Laboratory Expense
Cash
Paid for laboratory analysis

55
11

545

Credit
800

2,100

3,150

245

1,250

370

545

GENERAL JOURNAL
Date
20-April

Description

PAGE 28
Post.
Ref.

Debit

24 Fared, Drawing
Cash
Fared withdrew cash for personal
use

32
11

1,250

27 Cash
Professional Fees
Received fees from patients

11
41

1,720

30 Salary Expense
Cash
Paid salaries

51
11

1,725

30 Utilities Expense
Cash
Paid utilities

56
11

360

30 Accounts Receivable
Professional Fees
Fees earned on account

12
41

5,145

30 Miscellaneous Expense
Cash
Paid expenses

59
11

132

Credit
1,250

1,720

1,725

360

5,145

132

a. & c.

General Ledger

ACCOUNT Cash
Date
Item
20-April
1 Balance
1
5
12
17
20
24
27
30
30
30

Post Ref.

27
27
27
27
27
28
28
28
28
28

ACCOUNT Accounts Receivable


Date
Item
Post Ref.
20-April
1 Balance

5
27
30
28
ACCOUNT Supplies
Date
Item
20-April
1 Balance
8

Debit

ACCOUNT NO. 11
Credit
Balance

Post Ref.

800
3,150
1,250
370
545
1,250
1,720
1,725
360
132
Debit

Debit

27

ACCOUNT Prepaid Insurance


Date
Item
Post Ref.
20-April
1 Balance

17
27
ACCOUNT Equipment
Date
Item
Post Ref.
20-April
1 Balance

3
27

ACCOUNT NO. 12
Credit
Balance

3,150
5,145

245
Debit

370
Debit

2,100

4,123
3,323
6,473
5,223
4,853
4,308
3,058
4,778
3,053
2,693
2,561

6,725
3,575
8,720

ACCOUNT NO. 13
Credit
Balance
290
535
ACCOUNT NO. 14
Credit
Balance
465
835
ACCOUNT NO. 18
Credit
Balance
19,745
21,845

ACCOUNT Accounts Payable


Date
Item
Post Ref.
20-April
1 Balance

3
27
8
27
12
27

Debit

ACCOUNT NO. 22
Credit
Balance

2,100
245
1,250

765
2,865
3,110
1,860

ACCOUNT Fared, Capital


Date
Item
Post Ref.
20-April
1 Balance

ACCOUNT NO. 31
Debit
Credit
Balance

ACCOUNT Fared, Drawing


Date
Item
Post Ref.
20-April 24
28

ACCOUNT NO. 32
Credit
Balance

ACCOUNT Professional Fees


Date
Item
Post Ref.
20-April 27
28
30
28
ACCOUNT Salary Expense
Date
Item
Post Ref.
20-April 30
28
ACCOUNT Rent Expense
Date
Item
Post Ref.
20-April
1
27
ACCOUNT Laboratory Expense
Date
Item
Post Ref.
20-April 20
27
ACCOUNT Utilities Expense
Date
Item
Post Ref.
20-April 30
28

30,583

Debit
1,250
Debit

1,250
ACCOUNT NO. 41
Credit
Balance
1,720
5,145

Debit
1,725
Debit
800
Debit
545
Debit
360

1,720
6,865

ACCOUNT NO. 51
Credit
Balance
1,725
ACCOUNT NO. 53
Credit
Balance
800
ACCOUNT NO. 55
Credit
Balance
545
ACCOUNT NO. 56
Credit
Balance
360

ACCOUNT Miscellaneous Expense


Date
Item
Post Ref.
20-April 30
28

d.

Debit

ACCOUNT NO. 59
Credit
Balance

132

132

Trial Balance
Dr. Fared
Trial Balance
April 30 20--

Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Fared, Capital
Fared, Drawing
Professional Fees
Salary Expense
Rent Expense
Laboratory Expense
Utilities Expense
Miscellaneous Expense
TOTAL

Debit
RM
2,561
8,720
535
835
21,845

Credit
RM

1,860
30,583
1,250
6,865
1,725
800
545
360
132
39,308

39,308

SELF-EXAMINATION QUESTIONS
Multiple Choice
1.

2.

3.

A debit may signify:


A.

an increase in an asset account.

B.

a decrease in an asset account.

C.

an increase in a liability account.

D.

an increase in the owners capital account.

The type of account with a normal credit balance is:


A.

an asset

B.

drawing

C.

a revenue

D.

an expense

A debit balance in which of the following accounts would indicate a


likely error?

4.

A.

Accounts Receivable

B.

Cash

C.

Fees Earned

D.

Miscellaneous Expense

The receipt of cash from customers in payment of their accounts would


be recorded by a:
A.

debit to Cash; credit to Accounts Receivable

B.

debit to Accounts Receivable; credit to Cash

C.

debit to Cash; credit to Accounts Payable

D.

debit to Accounts Payable; credit to Cash

5.

The form listing the titles and balances of the accounts in the ledger on
a given date is the:
A.

income statement

B.

balance sheet

C.

statement of owners equity

D.

trial balance

Answers at End of Chapter

CLASS DISCUSSION QUESTIONS


1.

Do the terms debit and credit signify increase or decrease or can they
signify either? Explain.

2.

Explain why the rules of debit and credit are the same for liability
accounts and owners equity accounts.

3.

What is the effect (increase or decrease) of a debit to an


expense account (a) in terms of owners equity and (b) in terms of
expense?

4.

What is the effect (increase or decrease) of a credit to a revenue


account (a) in terms of owners equity and (b) in terms of revenue?

5.

Rearrange the following in proper sequence: (a) entry is posted to


ledger,

(b) business transaction occurs,

(c) entry is recorded in

journal, (d) business document is prepared, (e) business transaction is


authorized.

EXERCISES
Exercise 2-1
Chart of accounts
Objective 1
The following accounts appeared in recent financial statement of Continental
Airlines:
Accounts Payable
Aircraft Fuel Expense
Air Traffic Liability
Cargo and Mail Revenue
Commissions

Flight Equipment
Landing Fees
Passenger Revenue
Purchase Deposits for Flight Equipment
Spare Parts and Supplies

Identify each account as either a balance sheet account or an income statement


account. For each balance sheet account, identify it as an asset, a liability, or
owners equity. For each income statement account, identify it as a revenue or
an expense.
Exercise 2-2
Chart of accounts
Objective 1
Disi Interiors is owned and operated by Puan Disi, an interior decorator. In the
ledger of Disi Interiors, the first digit of the account number indicates its major
account classification (1-assets, 2-liabilities, 3-owners equity, 4-revenues, 5expenses). The second digit of the account number indicates the specific
account within each of the preceding major account classifications.
Match each account number with its most likely account in the list below. The
account numbers are 11,12,13, 21, 31, 32, 41, 51, 52, and 53.

Accounts:
Accounts Payable
Accounts Receivable
Cash
Fees Earned
Puan Disi, Capital

Puan Disi, Drawing


Land
Miscellaneous Expense
Supplies Expense
Wages Expenses

Exercise 2-3
Identifying Transactions
Objectives 2, 3
Nazif Travel & Tours is a travel agency. The nine transactions recorded by
Nazif during June, its first month of operations, are indicated in the following
T accounts:

Cash
(1)
(7)

RM

50,000
9,500

(2)
(3)
(4)
(6)
(8)

Accounts Payable
RM

2,500
10,000
6,050
6,000
2,500

Accounts Receivable
(5)

RM

12,500

(7)

RM

9,500

(9)

RM

1,450

Supplies
(2)

RM

2,500

Equipment
(3)

RM

30,000

(6)

RM

6,000

(3)

RM

20,000

Nazif, Capital
(1)

RM

50,000

RM

12,500

Nazif, Drawing
(8)

RM

2,500

Service Revenue
(5)

Operating Expenses
(4)
(9)

RM
RM

6,050
1,450

Indicate for each debit and each credit: (a) whether an asset, liability, owners equity,
drawing, revenue, or expense account was affected and (b) whether the account was
increased (+) or decreased (). Present your answers in the following form (transaction
(1) is given as an example):

Transaction
(1)

Account Debited
Type
Effect
asset
+

Account Credited
Type
Effect
owners equity
+

Exercise 2-4
Journal entries
Objectives 3, 4
Based upon the T accounts in Exercise 2-3, prepare the nine journal entries from which
the postings were made. Journal entry explanations may be omitted.

Exercise 2-5
Trial Balance
Objective 5
Based upon the data presented in Exercise 2-3, prepare a trial balance, listing the
accounts in their proper order.
Exercise 2-6
Journalizing and Posting
Objectives 3, 4
Edilah Enterprise has the following accounts in its ledger:
Cash
Accounts Receivable
Supplies
Office Equipment

Accounts Payable
Edilah, Capital
Edilah, Drawing
Fees Earned

Rent Expense
Advertising Expense
Utilities Expense
Miscellaneous Expense

Edilah Enterprise has completed the following transactions during the month of July of
the current year:
July

1
2
4
6
8
12
20
25
30
31

Paid rent for the month, RM3,000.


Paid advertising expense, RM500.
Paid cash for supplies, RM770.
Purchased office equipment on account, RM8,500.
Received cash from customers on account, RM3,600.
Paid creditor on account, RM2,150.
Withdrew cash for personal use, RM1,500.
Paid cash for repairs to office equipment, RM120.
Paid telephone bill for the month, RM195.
Fees earned and billed to customers for the month,

31

RM11,150.
Paid electricity bill for the month, RM430.

Required
a.

Journalize the transactions for July in a general journal. Journal entry explanations
may be omitted.

b.

Post to the ledger, extending the account balance to the balance column after each
posting.

c.

Prepare a trial balance of the ledger as of July 31.

Exercise 2-7
Transactions and Accounts
Objectives 2, 3, 4
The following selected transactions were completed during February of the current year:
1.

Billed customers for fees earned, RM5,210.

2.

Purchased supplies on account, RM520.

3.

Received cash from customers on account, RM3,200

4.

Paid creditors on account, RM400.

Required
a.

Journalize the foregoing transactions in a general journal, using the appropriate


number to identify the transactions. Journal entry explanations may be omitted.

b.

Post the entries prepared in (a) to the following accounts:


Cash
Supplies
Accounts Receivable

Accounts Payable
Fees Earned

Exercise 2-8
Trial Balance
Objective 5
The accounts in the ledger of Edfa Management Services as of August of the current year
are listed in alphabetical order as follows. All accounts have normal balances. The
balance of the cash account has been intentionally omitted.
RM

RM

Accounts Payable
Accounts Receivable
Cash
Edfa, Capital
Edfa, Drawing
Fees Earned
Insurance Expense
Land
Miscellaneous Expense

18,710
29,500
?
110,290
20,000
315,000
5,000
125,000
9,900

Notes payable
Prepaid Insurance
Rent Expense
Supplies
Supplies Expense
Unearned Rent
Utilities Expense
Wages Expense

35,000
3,150
58,000
4,100
5,900
6,000
41,500
175,000

Required
Prepare a trial balance, listing the accounts in their proper order and inserting the missing
figure for cash.

PROBLEMS
P 2-1
Journal Entries and Trial Balance
Objective 2, 3, 4, 5
Muhammad Naqib opened a business in architecture, Naqib Architect, on April of the
current year. During the month, he completed the following transactions connected with
his professional practice:
a.

Transferred cash from a personal bank account to an account to

b.

be used for the business, RM30,000.


Purchased used automobile for RM18,900, paying RM6,000

c.
d.
e.

cash and giving a non-interest-bearing note for the remainder.


Paid April rent for office and workroom, RM2,200.
Paid cash for supplies, RM300
Purchased office and drafting room equipment on account,

f.

RM4,200.
Paid cash for insurance policies on automobile and equipment,

g.
h.
i.
j.

RM810.
Received cash from a client for plans delivered, RM2,725.
Paid cash to creditors on account, RM2,100.
Paid cash for miscellaneous expenses, RM120.
Received invoice for blueprint service, due in following month,

k.

RM275.
Recorded fee earned on plans delivered, payment to be received

l.
m.
n.
o.

in May, RM3,500.
Paid salary of assistant, RM1,500.
Paid cash for miscellaneous expenses, RM60.
Paid installment due on note payable, RM800.
Paid gas, oil, and repairs on automobile for April, RM170.

Required
a.

Journalize entries for transactions (a) through (o) in a general journal using the
following account titles:

b.

Cash
Naqib, Capital
Accounts Receivable
Professional Fees
Supplies
Rent Expense
Prepaid Insurance
Salary Expense
Automobiles
Automobile Expense
Equipment
Blueprint Expense
Notes Payable
Miscellaneous Expense
Accounts Payable
Post the journal to the ledger, extending the account balance to the balance
column after each posting.

c.

Prepare a trial balance for Naqib Architect as of April 30 of the current year.

P 2-2
Journal Entries and Trial Balance
Objectives 2, 3, 4, 5
On October 1 of the current year, Faridah established Mayang Realty, which completed
the following transactions during the month:
a.
b.
c.

Faridah invested cash in the business, RM25,000.


Purchased supplies on account, RM2,900.
Earned sales commissions, receiving cash, RM32,600.

d.
e.
f.
g.

Paid rent on office and equipment for the month, RM4,500.


Paid creditor on account, RM1,000.
Withdrew cash for personal use, RM2,000.
Paid automobile expenses (including rental charge) for month,

h.
i.

RM1,900, and miscellaneous expenses, RM1,050.


Paid office salaries, RM4,000.
Determined that the cost of supplies used was RM1,250.

Required
a.

Journalize entries for transactions (a) through (i) in a general journal using the
following account titles:
Cash
Supplies
Accounts Payable
Faridah, Capital
Faridah, Drawing
Sales Commissions

b.

Rent Expense
Office Salaries Expense
Automobile Expense
Supplies Expense
Miscellaneous Expense

Post the journal to the ledger, extending the account balance to the balance
column after each posting.

c.

Prepare a trial balance for Mayang Realty as of October 31 of the current year.

P 2-3
Journal Entries and Trial Balance
Objectives 2, 3, 4, 5
On July 10 of the current year, Umi Syahida established an interior decorating business,
Umi Interior Design. During the remainder of the month, Syahida completed the
following transactions related to the business:

July

10
10
11

Syahida invested cash in the business, RM20,000.


Paid rent for period of July 10 to end of month, RM1,500.
Purchased a truck for RM15,000, paying RM5,000 cash

12
14

and giving a note payable for the remainder.


Purchased equipment on account, RM2,500.
Purchased supplies for cash, RM1,050.

14

Paid premiums on property and casualty insurance,

15
21

RM750.
Received cash for job completed, RM3,100.
Paid creditor for equipment purchased on July 12,

24

RM2,500.
Recorded jobs completed on account and sent invoices to

26

customers, RM3,100.
Received an invoice for truck expenses, to be paid in

27
27
28
31
31

August, RM225.
Paid utilities expense, RM1,205.
Paid miscellaneous expenses, RM173.
Received cash from customers on account, RM1,420.
Paid wages of employees, RM2,100.
Withdrew cash for personal use, RM1,500.

Required
a.

Journalize each transaction in a general journal, referring to the following chart of


accounts in selecting the accounts to be debited and credited. Journal entry
explanations may be omitted.

b.

11 Cash
31 Syahida, Capital
12 Accounts Receivable
32 Syahida, Drawing
13 Supplies
41 Fees Earned
14 Prepaid Insurance
51 Wages Expense
16 Equipment
53 Rent Expense
18 Truck
54 Utilities Expense
21 Notes Payable
55 Truck Expense
22 Accounts Payable
59 Miscellaneous Expense
Post the journal to a ledger, inserting appropriate posting reference as each item is
posted. Extend the balances to the balance column after each transaction is posted.

c.

Prepare a trial balance for Umi Interior Design as of July 31.

P 2-4
Journal Entries and Trial Balance
Objectives 2, 3, 4, 5
Sabrina Realty acts as an agent in buying, selling, renting, and managing real estate. The
account balances at the end of April of the current year as follows:

11
12
13
14
16
21
22
31
32
41
51
52
53
54
59

Cash
Accounts Receivable
Prepaid Insurance
Office Supplies
Land
Accounts Payable
Notes Payable
Sabrina, Capital
Sabrina, Drawing
Fees Earned
Salary and Commission Expense
Rent Expense
Advertising Expense
Automobile Expense
Miscellaneous Expense

29,500
38,600
750
625
0
13,250
0
63,025
10,000
158,725
123,075
19,000
8,900
3,950
600
235,000

235,000

The following business transactions were completed by Sabrina Realty during May of the
current year:
May

1
2
3
9
15
20
29
30
31
31

Purchased office supplies on account, RM1,100.


Paid rent on office for month, RM2,500.
Received cash from clients on account, RM34,200.
Paid insurance premiums, RM1,925.
Paid advertising expense, RM2,150
Paid creditor on account, RM7,650.
Paid miscellaneous expense, RM215.
Paid automobile expense, RM850.
Paid salaries and commissions for the month, RM30,850.
Recorded revenue earned and billed to clients during the

31

month, RM46,200.
Purchased land for a future building site for RM50,000,
paying RM10,000 in cash and giving a note payable for

31

the remainder.
Withdrew cash for personal use, RM2,500.

Required
a.

Record the May 1 balance of each account in the balance column of a threecolumn account, write Balance in the item section, and place a check mark () in
the posting reference column.

b.

Journalize the transactions for May in a general journal.

c.

Post to the ledger, extending the account balance to the balance columns after
each posting.

d.

Prepare a trial balance as of May 31.

P 2-5
Journal Entries and Trial Balance
Objectives 2, 3, 4, 5
Azlan Accounting Services has the following account balances at the end of March of the
current year:
11
12
13
14
16
21
22
31
32
41
51
52
53
54
59

Cash
Accounts Receivable
Prepaid Insurance
Office Supplies
Land
Accounts Payable
Notes Payable
Azlan, Capital
Azlan, Drawing
Fees Earned
Salaries Expense
Rent Expense
Advertising Expense
Automobile Expense
Miscellaneous Expense

28,150
38,750
1,100
1,050
0
11,510
0
29,840
1,000
126,500
84,100
5,500
3,900
2,750
1,550
167,850

167,850

The following business transactions were completed by Azlan Accounting


Services during April of the current year:
April

1
3
5
7
15

Paid rent on office for month, RM2,500.


Purchased office supplies on account, RM1,375.
Paid insurance premiums, RM1,650.
Received cash from clients on account, RM30,200.
Purchased land for a future building site for RM75,000,
paying RM15,000 in cash and giving a note payable for

18
24
28
29
30

the remainder.
Paid creditor on account, RM7,150.
Paid advertising expense, RM1,550
Paid automobile expense, RM715.
Paid miscellaneous expense, RM215.
Recorded revenue earned and billed to clients during the

30
30

month, RM38,400.
Paid employee salaries for the month, RM21,500.
Withdrew cash for personal use, RM1,500.

Required
a.

Record the April 1 balance of each account in the balance column of a


three-column account, write Balance in the item section, and place a
check mark () in the posting reference column.

b.

Journalize the transactions for April in a general journal.

c.

Post to the ledger, extending the account balance to the balance columns
after each posting.

d.

Prepare a trial balance as of April 30.

ANSWERS TO SELF-EXAMINATION QUESTIONS


Multiple Choice
1.

2.

3.

4.

5.

PAST EXAMINATION QUESTIONS


Question 1
On 1st November 2001, Pak Suci established a cleaning services business, called
Khidmad Bersih Jabatan. The following transactions were occurred on the first month of
his business operation:
November 1
2

Transferred cash from a personal bank amounted RM12,000 and


vehicles valued RM32,000, to be used for business.
Paid cash for supplies, RM1,500.

Purchased cleaning accessories on account, RM3,500.

10

Received telephone called from Security Department to clean the


office. Estimated cost on the job, RM1,750.

15

Withdrew cash for personal use, RM400.

17

Received payment from customers on services provided, RM1,700.

20

Paid telephone bill, RM350

25

Billed a customer for job completed amounted RM2,000.

28

Fully paid creditor for cleaning accessories purchased on November 5.

30

Paid wages of employees, RM550.

REQUIRED:
(a)

Journalize the transactions for November 2001 in a general journal. (Journal


entry explanations may be omitted)

(b)

Post to the ledger, extending the account balance to the balance columns after
each posting.

(c)

Prepare a trial balance as of 30 November 2001.


(November 2001/2002)

(Hints: Trial balance total: RM47,700)

Question 2
Encik Tajudin established a hotel business, Hotel Langkasuka which operated at Pulau
Kencana on January 1, 2001. All the rent income are on cash basis and the rent income
will be calculated at the end of month. Credit facilities also provided on advanced
booking.
The following transactions were completed during January 2001:
January 1

The following assets were transferred to be used for the business, by


Encik Tajudin:

Cash
RM250,000
Furniture RM 70,000
Equipment RM 40,000
3

Purchased computer for RM7,000, paying RM3,000 cash


balance will be paid later.

Billed Syarikat Beruang for occupying 7 hotel


amounted RM5,200.

Hired an account clerk to control over the hotels revenues and expenses
with a monthly salary RM850.

rooms

and the

and a hall

12

Paid the remaining balance for computer purchased on January 3.

15

Purchased food supplies for a month, RM 2,500, cash.

21

Received full payment from Syarikat Beruang.

25

Paid January expenses:


Utilities expenses
RM3,500
Salaries and Wages RM8,000
Advertising
RM2,560

31

Recorded rental revenue during January amounted, RM12,500.

REQUIRED:
(a)

Journalize the transactions for January 2001 in a general journal. (Journal entry
explanations may be omitted)

(b)

Post to the ledger, extending the account balance to the balance columns after
each posting.

(c)

Prepare a trial balance as of 31 January 2001.


(May 2001/2002)

(Hints: Trial balance total: RM377,700)

Question 3
Adam Affan established a furniture repair business around Ipoh, Perak on 1st May 2000,
called Westlife Furniture. The following transactions were occurred during May 2000:
May 1

Adam Affan invested cash amounted RM5,000, repair equipment RM2,000


and tools valued RM10,000, to be used for business.

Rented a shop and paid rent for May RM500.

Purchased additional repair equipment on account, RM400.

15

Gave services to a customer and received cash RM900.

18

Purchased a used van for RM15,000, paying RM3,000 cash and giving a
note payable for the remainder.

22

Paid accounts payable RM200.

24

Withdrew cash for personal use, RM600.

27

Gave services to a customer and received cash RM4,000.

29

Paid electricity bill RM350 and telephone RM150.

30

Paid salary of employees for May, RM2,000.

31

Paid cash RM100 for van maintenance expenses.

31

Gave services to a customer RM2,000, on credit.

REQUIRED:
(a)

Journalize the transactions for May 2000 in a general journal. (Journal entry
explanations may be omitted)

(b)

Post to the ledger, extending the account balance to the balance columns after
each posting.

(c)

Prepare a trial balance as of 31 May 2000.


(May 2000/2001)

(Hints: Trial balance total: RM36,100)


Question 4
Firma Hartanah Abang Naz acts as an agent in buying, selling, renting, and managing real
estate. The account balances at the end of April of the current year are as follows:
ACCCOUNT
NO.
11
12
13
14
16
21
22
31
32
41
51
52
53
54
59

ACCOUNT
Cash
Accounts Receivable
Prepaid Insurance
Office Supplies
Land
Accounts Payable
Notes Payable
Abang Naz, Capital
Abang Naz, Drawing
Fees Earned
Salary and Commission Expense
Rent Expense
Advertising Expense
Automobile Expense
Miscellaneous Expense

RM

RM

29,500
38,600
750
625
0
13,250
0
63,025
10,000
158,725
123,075
19,000
8,900
3,950
600
235,000

235,000

The following business transactions were completed by Firma Hartanah Abang Naz
during May of the current year:
May

1
2
3
9
10

Purchased office supplies on account, RM1,100.


Paid rent on office for month, RM2,500.
Received cash from clients on account, RM34,200.
Paid insurance premiums, RM1,925.
Returned a portion of the office supplies purchased on 1

15
20
29
30
31

May , RM150
Paid advertising expense, RM2,150
Paid creditor on account, RM7,650.
Paid miscellaneous expense, RM215.
Paid automobile expense, RM850.
Received cash RM500 from the salesperson for the

31
31

commission overpayment.
Paid salaries and commissions for the month, RM30,850.
Recorded revenue earned for the services provided during

31

the month, RM46,200.


Purchased land for a future building site for RM50,000,
paying RM10,000 in cash and giving a note payable for

31

the remainder.
Withdrew cash for personal use, RM2,500.

Required
a.

Journalize the transactions for May in a general journal. (Journal

entry

explanations may be omitted).

b.

Post to the ledger, extending the account balance to the balance columns after each
posting.

d.

Prepare a trial balance as of May 31.


(November 2000/2001)

(Hints: Trial balance total: RM314,500)


Question 5
Ahmad started a rented car business for the UUM students, named Perniagaan Cepat &
Pantas on 1 December, 2001.
The following transactions were completed on the first month of his business operation:
December
1

The following assets were transferred to be used for the business, by


Ahmad:
Cash
RM 5,000
Vehicles
RM35,000
Office Equipment RM 8,850

Purchased a used car for RM24,500, paying RM3,000 cash and the
balance will be paid by bank loan.

Hired a year one UUMs female student as an agent to get clients. The
agent will be paid a commission RM25 per new client.

Paid petrol expense RM350.

18

Paid car repair RM260, for cash.

25

Ahmad paid his mobile phone bill RM125. The mobile phone is for
personal use.

30

Paid bank for loan made on December 4 amounted to RM550. This


amount included interest on loan RM50.

31

Recorded rental revenue for December 2001 amounted, RM2,800.

REQUIRED:
(a)

Journalize the transactions for December 2001 in a general journal. (Journal


entry explanations may be omitted)

(b)

Post to the ledger, extending the account balance to the balance columns after
each posting.

(c)

Prepare a trial balance as of 31 December 2001.


(Sub paper January 2002)

(Hints: Trial balance total: RM72,650)