ACCT101-Assignmemnt1

It is a question and answer assignment.

The additional file is an example for the solution, it is the way how it must be solved.

The Assignment must be submitted on Blackboard (WORD format only) via allocated

folder.

Assignments submitted through email will not be accepted. Students are advised to make their work clear and well presented, marks may be

reduced for poor presentation. This includes filling your information on the cover

page.

Students must mention question number clearly in their answer. Late submission will NOT be accepted. Avoid plagiarism, the work should be in your own words, copying from students or

other resources without proper referencing will result in ZERO marks. No exceptions.

All answers must be typed using Times New Roman (size 12, double-spaced) font.

No pictures containing text will be accepted and will be considered plagiarism.

Submissions without this cover page will NOT be accepted.

College of Administration and Finance Sciences
Assignment (1)
Deadline: Saturday 12/10/2024 @ 23:59
Course Name: Principles of Accounting
Student’s Name:
Course Code: ACCT101
Student’s ID Number:
Semester: First Term 24/25
CRN: 15181
Academic Year: 1446 H
For Instructor’s Use only
Instructor’s Name: Dr. Youssef RIAHI
Students’ Grade:
/15
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
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College of Administration and Finance Sciences
Assignment Question(s):
(Marks 15)
Question 1:
(5 Marks)
Abdulaziz is the owner of a service company that provides consulting services and charges the clients
for them. He uses a journal to record his business transactions. Below are some of the transactions that
occurred in July 2024. For each transaction, apply the rules of double-entry accounting by preparing
the journal entry in SAR currency and explain the effect on the accounting equation.
1. On July 1, Abdulaziz invested SAR 50,000 cash in his business to start operations.
2. On July 6, the company bought office equipment worth SAR 15,000 on credit from a supplier.
3. On July 10, the company received SAR 5,000 cash in advance from customer for providing
consulting services next month.
4. On July 16, the company paid SAR 4,000 cash for utility bills for the month.
5. On July 21, the company made a cash payment of SAR. 15,000 on the equipment that purchased
on account on July 6th.
6. On July 28, the company performed services worth SAR 6,000 and the bill was sent to the
customer.
Question 2:
(5 Marks)
What is the accounting cycle? Explain every step starting from analyzing transactions to
preparing post-closing trial balance.
(Marks5)
Question 3:
(5 Marks)
ABC Consulting is a company that provides consulting services to clients in various industries. The
following are the balances taken from the trial balance:
ABC
Trial Balance
31/12/2023
Account
Debit
(SAR)
Credit
(SAR)
Cash
10,000
–
Accounts Receivable
15,000
–
Supplies
5,000
–
Equipment
50,000
–
Accumulated Depreciation Equipment
–
10,000
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Accounts Payable
–
8,000
Unearned Revenue
–
12,000
Common Stock
–
40,000
Dividends
5,000
–
Service Revenue
–
60,000
Salaries Expense
25,000
–
Rent Expense
10,000
–
Depreciation Expense
5,000
–
Supplies Expense
3,000
–
Interest Expense
2,000
–
Total
130,000
130,000
Required:
1.Prepare the income statement for the year ended 31 December 2023.
2.Prepare the statement of retained earnings for the year ended 31 December 2023.
3.Prepare the balance sheet as at 31 December 2023.
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College of Administration and Finance Sciences
Assignment (1)
Deadline: Saturday 12/10/2024 @ 23:59
Course Name: Principles of Accounting
Student’s Name: SEU|ELITE
Course Code: ACCT101
Student’s ID Number:
Semester: First Term 24/25
CRN:
Academic Year: 1446 H
For Instructor’s Use only
Instructor’s Name: Dr.
Students’ Grade:
/15
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
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College of Administration and Finance Sciences
Assignment Question(s):
(Marks 15)
Question 1:
(5 Marks)
Abdulaziz is the owner of a service company that provides consulting services and charges the clients
for them. He uses a journal to record his business transactions. Below are some of the transactions that
occurred in July 2024. For each transaction, apply the rules of double-entry accounting by preparing
the journal entry in SAR currency and explain the effect on the accounting equation.
1. On July 1, Abdulaziz invested SAR 50,000 cash in his business to start operations.
Date
Details
Dr
July 1
Cash
SAR 50,000
Cr
Capital
SAR 50,000
The transaction increases assets and equity by SAR 50,000 leaving the accounting equation
balanced.
2. On July 6, the company bought office equipment worth SAR 15,000 on credit from a supplier.
Date
Details
Dr
July 6
Office equipment
SAR 15,000
Cr
Accounts payables
SAR 15,000
The transaction increases assets (equipment) and liabilities by SAR 15,000 leaving the accounting
equation balanced (Wild & Shaw, 2019).
3. On July 10, the company received SAR 5,000 cash in advance from customer for providing
consulting services next month.
Date
Details
Dr
July 10
Cash
SAR 5,000
Unearned consulting revenue
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Cr
SAR 5,000
College of Administration and Finance Sciences
The transaction increases assets and liabilities by SAR 5,000 leaving the accounting equation
balanced.
4. On July 16, the company paid SAR 4,000 cash for utility bills for the month.
Date
Details
Dr
July 16
Utility bills
SAR 4,000
Cash
Cr
SAR 4,000
The transaction decreases Liability and assets by SAR 4,000 leaving the accounting equation
balanced.
5. On July 21, the company made a cash payment of SAR. 15,000 on the equipment that purchased
on account on July 6th.
Date
Details
Dr
July 21
Accounts payable
SAR 15,000
Cash
Cr
SAR 15,000
The transaction decreases liabilities and assets by SAR 15,000 leaving the accounting equation
balanced.
6. On July 28, the company performed services worth SAR 6,000 and the bill was sent to the
customer.
Date
Details
Dr
July 21
Accounts receivable
SAR 6,000
Service revenue
Cr
SAR 6,000
The transaction increases assets and equity by SAR 6,000 leaving the accounting equation balanced
(Wild & Shaw, 2019).
Question 2:
(5 Marks)
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College of Administration and Finance Sciences
What is the accounting cycle? Explain every step starting from analyzing transactions to
preparing post-closing trial balance.
(Marks5)
The Accounting Cycle: Steps from Analyzing Transactions to Preparing the Post-Closing Trial
Balance
The accounting cycle is a series of steps used by companies to record and manage their financial
transactions, ensuring accurate and complete financial statements. Below is a detailed explanation of
each step:
1. Analyzing Transactions
The first step involves identifying and examining all financial transactions to determine their impact
on the accounting records. Transactions can include sales, purchases, receipts, payments, and other
economic events. Each transaction must be analyzed to decide which accounts are affected, and
whether they are increased or decreased.
2. Journalizing Transactions
Once transactions are analyzed, they are recorded in the *journal* as *journal entries*. The journal is
also called the book of original entry, where the double-entry bookkeeping system is applied. Every
entry includes a date, accounts involved, amounts debited and credited, and a brief description of the
transaction.
3. Posting to the Ledger
After journalizing, entries are posted to the *general ledger*. The ledger contains all accounts used
by the business, and each journal entry is posted to the appropriate accounts. Posting involves
transferring the debits and credits from the journal to the specific ledger accounts affected by the
transaction.
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4. Preparing the adjusted Trial Balance
A *trial balance* is prepared after posting to ensure that debits equal credits. It is a list of all ledger
accounts and their balances at a particular point in time. The total of the debit balances should equal
the total of the credit balances. If there is a discrepancy, errors in journalizing or posting must be
corrected.
5. Adjusting Entries
At the end of an accounting period, *adjusting entries* are made to account for revenues earned and
expenses incurred that were not recorded during the period. Adjustments are necessary for items
such as accrued revenues, accrued expenses, prepaid expenses, depreciation, and unearned revenues.
Adjusting entries ensure that the financial statements comply with the accrual basis of accounting.
6. Adjusted Trial Balance
Once adjusting entries are made, an *adjusted trial balance* is prepared. It reflects the balances after
adjustments have been posted to the ledger. This trial balance ensures that the accounts are ready for
preparing the financial statements.
7. Preparing Financial Statements
Using the adjusted trial balance, the company prepares its *financial statements*. These typically
include the *income statement*, *statement of retained earnings*, *balance sheet*, and *statement
of cash flows*. These statements summarize the company’s financial performance and position at the
end of the accounting period.
8. Closing Entries
After financial statements are prepared, *closing entries* are made to transfer the balances of
temporary accounts (revenue, expense, and dividend accounts) to the retained earnings account. This
process resets the balances of temporary accounts to zero, preparing them for the next accounting
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period.
9. Post-Closing Trial Balance
The final step is preparing the *post-closing trial balance*. This includes only permanent accounts
(assets, liabilities, and equity) since all temporary accounts have been closed. The post-closing trial
balance ensures that debits still equal credits after the closing process and is the last checkpoint before
the new accounting period begins.
10- prepare reversing entries:
After everything is closed and the old year is done, accountants sometimes perform one more step that
could be called the beginning of the next accounting cycle as easily as it could be called the end of the
old.
Question 3:
(5 Marks)
ABC Consulting is a company that provides consulting services to clients in various industries. The
following are the balances taken from the trial balance:
Account
ABC
Trial Balance
31/12/2023
Debit
(SAR)
Credit
(SAR)
Cash
10,000
–
Accounts Receivable
15,000
–
Supplies
5,000
–
Equipment
Accumulated Depreciation Equipment
50,000
–
–
10,000
Accounts Payable
–
8,000
Unearned Revenue
–
12,000
Common Stock
–
40,000
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College of Administration and Finance Sciences
Dividends
5,000
–
Service Revenue
–
60,000
Salaries Expense
25,000
–
Rent Expense
10,000
–
Depreciation Expense
5,000
–
Supplies Expense
3,000
–
Interest Expense
2,000
–
Total
130,000
130,000
Required:
1.Prepare the income statement for the year ended 31 December 2023.
ABC
Income statement
For the year ended 31 December 2023.
Service revenue
60,000
Total Revenue
Expenses
60,000
Salaries Expense
25,000
Rent Expense
10,000
Depreciation Expense
5,000
Supplies Expense
3,000
Interest Expense
2,000
Total Expenses
45,000
Net Income
15,000
2.Prepare the statement of retained earnings for the year ended 31 December 2023.
ABC
Retained Earnings
For the year ended 31 December 2023.
Retained earnings January 2023
0
Add: Net income
15,000
Less: Dividends
(5,000)
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Ending retained earnings
10,000
3.Prepare the balance sheet as at 31 December 2023.
ABC
Balance sheet
As at 31 December 2023.
Assets
Current assets
Cash
10,000
Accounts Receivable
15,000
Supplies
5,000
Total current assets
30,000
Fixed assets
Equipment
50,000
Accumulated Depreciation – Equipment
Total assets
(10,000)
40,000
70,000
Liabilities and shareholders’ equity
Accounts Payable
8,000
Unearned Revenue
12,000
Total liabilities
20,000
Shareholders’ equity
Common Stock
40,000
Retained earnings
10,000
Total Liabilities and shareholders’ equity
70,000
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References
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2021). *Intermediate accounting* (17th ed.). John
Wiley & Sons.
Wild, J. J., & Shaw, K. W. (2019). Fundamental accounting principles. McGraw-Hill.
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