Exercise VII VII.A. Accounting Cycle The Accounting Cycle – Problem Set ABC Company Ltd. Balance Sheet on Nov. 30, 2014 Assets Equities Equipment 2 000 Paid-in Capital 11 000 Land 5 500 Retained Earnings 1 000 Office Supplies Inventory 1 200 Loan Payable 2 000 Accounts Receivable 7 400 Tax payables 900 Cash, Bank 3 000 Accounts payable 3 200 Prepaid expenses 3 000 Unearned rent revenue 4 000 Allowance for uncollectible Accounts 3 000 Total assets 22 100 Total equities 22 100 Summary of transactions during December: 1. Cash-Purchase of € 1 800 of Office Supplies Inventory 2. Performed consulting services, for which we received € 9,100 cash immediately. 3. Received an invoice for a series of advertisements, € 1 200, that appeared in the local news during December and will be paid in January. 4. In November 2014 we performed additional consulting work, € 2 000 on credit (5/30, n 90) and in December the customer used the discount for prompt payment.. 5. Performed advertisement services for Customer XYZ, for which we will receive € 1,000 on 2 month credit sale. 6. Paid salaries to employees of € 1 200 for December. 7. We sold some of the redundant office supplies inventory on the market –€ 500 through credit card transaction (a straight 3% of credit card services were taken). 8. Received an invoice for external services of € 1 400 for December to be paid with 60 credit term 9. Paid outstanding tax payables. 10. Paid trade creditors € 1,300. 11. The cost of office supplies used during December is € 1,100. 12. In the beginning of September 2014 a subscription rights for local newspaper magazine of € 6 000 was paid for half-a year term in advance; 13. In the beginning of October 2014 company receives rent for 6 months in advance, €6,000 14. At the end of the month Company repaid to the Bank credit tranche 500 and paid interest charges (interest rate as of 9 % p.a.) 15. At the end of month the Customer XYZ made a claim on the advertisement services and we agreed to sales allowance (a reduction of the original selling price) in the amount of 20%. 16. Depreciation of equipment for December amounts to € 100. 17. ABC company acknowledged the $2,000 worth of bad debts in December 2014. Required: a) Prepare the opening journal entry on Dec. 1, 2014. b) Prepare the journal entries for the transactions (1. – 17) for the month of December and post them to the T-accounts, opening additional T-accounts for accounts as needed. Cross-reference the entries using the numbers of the transactions above. c) Prepare a trial balance. d) Prepare the adjusting journal entries and record them at the end of December in the T-accounts as well as in the trial balance. e) Prepare the closing entries for the temporary accounts and the Income Statement. f) Prepare the closing entries for the permanent accounts and the Balance Sheet as of Dec. 31, 2014. VII.B. Account Receivables valuation Thomson Corp. had sales of € 100,000 during 201 ...

1. Exercise VII
VII.A. Accounting Cycle
The Accounting Cycle – Problem Set ABC Company Ltd.
Balance Sheet on Nov. 30, 2014
Assets
Equities
Equipment
2 000
Paid-in Capital
11 000
Land
5 500
Retained Earnings
1 000
Office Supplies Inventory
1 200
Loan Payable
2 000
Accounts Receivable
7 400
Tax payables
900
Cash, Bank
3 000
Accounts payable
3 200
Prepaid expenses
3 000
Unearned rent revenue
4 000

2. Allowance for uncollectible Accounts
3 000
Total assets
22 100
Total equities
22 100
Summary of transactions during December:
1. Cash-Purchase of € 1 800 of Office Supplies Inventory
2. Performed consulting services, for which we received € 9,100
cash immediately.
3. Received an invoice for a series of advertisements, € 1 200,
that appeared in the local news during December and will be
paid in January.
4. In November 2014 we performed additional consulting work,
€ 2 000 on credit (5/30, n 90) and in December the customer
used the discount for prompt payment..
5. Performed advertisement services for Customer XYZ, for
which we will receive € 1,000 on 2 month credit sale.
6. Paid salaries to employees of € 1 200 for December.
7. We sold some of the redundant office supplies inventory on
the market –€ 500 through credit card transaction (a straight
3% of credit card services were taken).
8. Received an invoice for external services of € 1 400 for
December to be paid with 60 credit term
9. Paid outstanding tax payables.
10. Paid trade creditors € 1,300.
11. The cost of office supplies used during December is €
1,100.
12. In the beginning of September 2014 a subscription rights for
local newspaper magazine of € 6 000 was paid for half-a year
term in advance;
13. In the beginning of October 2014 company receives rent for
6 months in advance, €6,000
14. At the end of the month Company repaid to the Bank credit
tranche 500 and paid interest charges (interest rate as of 9 %

3. p.a.)
15. At the end of month the Customer XYZ made a claim on the
advertisement services and we agreed to sales allowance (a
reduction of the original selling price) in the amount of 20%.
16. Depreciation of equipment for December amounts to € 100.
17. ABC company acknowledged the $2,000 worth of bad debts
in December 2014.
Required:
a) Prepare the opening journal entry on Dec. 1, 2014.
b) Prepare the journal entries for the transactions (1. – 17) for
the month of December and post them to the T-accounts,
opening additional T-accounts for accounts as needed. Cross-
reference the entries using the numbers of the transactions
above.
c) Prepare a trial balance.
d) Prepare the adjusting journal entries and record them at the
end of December in the T-accounts as well as in the trial
balance.
e) Prepare the closing entries for the temporary accounts and
the Income Statement.
f) Prepare the closing entries for the permanent accounts and
the Balance Sheet as of Dec. 31, 2014.
VII.B. Account Receivables valuation
Thomson Corp. had sales of € 100,000 during 2015, including €
60,000 on credit. Balances on Dec. 31, 2014, were Accounts
Receivable, € 9,000, and Allowance for Bad Debts, € 800 (=
credit balance). Data for 2015: collections on accounts
receivable were € 56,000. Bad debts expense was estimated at 2
% of credit sales, as in previous years. Write-offs of bad debts
during 2015 were € 1,000.
Requirements:
1. Prepare all journal entries for 2015.

4. 2. Show the ending balances of the balance sheet accounts on
Dec. 31, 2015.
VII.C. Aging of accounts receivables
The aging of accounts receivable method directly incorporates
the customers’ payment histories. As more time elapses after
the sale, collection becomes less likely. The $126,000 balance
in Accounts Receivable on December 31, 2014, might be aged
as shown below. The beginning balance in the Allowance
account is amounted to € 1 000.
Exercise III
Accounting Cycle
The Accounting Cycle – Problem Set ABC Company Ltd.
Balance Sheet on Nov. 30, 2018
Assets
Equities
Equipment
5 000
Paid-in Capital
4 000
Office Supplies Inventory
1 000
Retained Earnings
3 600
Accounts Receivable
1 000
Tax payable
1 000
Cash, Bank

5. 6 600
Accounts payable
5 000
Total assets
13 600
Total equities
13 600
Summary of transactions during December:
1. Cash-Purchase of €1,000 of Office Supplies Inventory
2. At the end of the month Company took out a 9 % p.a., 90 day,
€10,000 loan with the Bank
3. Performed consulting services, for which we received € 2,000
cash immediately.
4. Received an invoice for a series of advertisements, € 1 000,
that appeared in the local news during December and will be
paid in January.
5. Performed additional consulting work, € 1 800 on credit.
6. Performed advertisement services, for which we received €
1,000 cash immediately.
7. Paid salaries to employees of € 2,000 for December.
8. Paid outstanding tax € in the amount 800
9. Paid creditors € 1,300.
10. The cost of office supplies used during December is € 850.
11. Depreciation of equipment for December amounts to € 250.
Required:
a) Prepare the opening journal entry on Dec. 1, 2018.
b) Prepare the journal entries for the transactions (1. – 11.) for
the month of December and post them to the T-accounts,
opening additional T-accounts for accounts as needed. Cross-
reference the entries using the numbers of the transactions
above.
c) Prepare a trial balance.
d) Prepare the closing entries for the temporary accounts and
the Income Statement.

6. e) Prepare the closing entries for the permanent accounts and
the Balance Sheet as of Dec. 31, 2018.
Exercise VIII
VIII.A. Accounting Cycle
The Accounting Cycle – Problem Set ABC Company Ltd.
Summary of transactions during December:
1. Paid outstanding salary payables.
2. Paid trade creditors € 2,500.
3. Salaries to employees of € 1 200 were calculated for
December to be paid in January.
4. Purchase of € 1 500 of Office Supplies Inventory with 10%
cash discount for cash transaction.
5. Purchase of raw materials Inventory of € 1 900 was done with
two month trade credit.
6. The freight in for both supplies and raw material inventory
was paid in the amount of € 200.
7. Due to the low quality of the purchased office supplies
inventory the company returned back € 300 of inventory.
8. Performed advertisement services for Customer XYZ, for
which we will receive € 2,000 on 3 month credit sale.
9. At the end of month the Customer XYZ made a claim on the
advertisement services and we agreed to sales allowance (a
reduction of the original selling price) in the amount of 25%.
10. Received an invoice for a series of advertisements, € 3 000,
that appeared in the local news during December and will be
paid in January.
11. Received an invoice for external services of € 1 500 for
December to be paid with 60 credit term
12. Performed consulting services, in the amount of € 2,000
with 20% for cash discount on sales (cash immediately
received).
13. In November 2014 we performed additional consulting
work, € 2 100 on credit (10/30, n 90) and in December 2014 the

7. customer used the discount for prompt payment.
14. We sold office supplies inventory on the market for € 2000
through credit card transaction (a straight 2% of credit card
services were taken).
15. The cost of office supplies used during December is € 200.
16. The cost of raw materials inventory used during December
is € 3 000.
17. In the beginning of October 2014 a subscription rights for
local newspaper magazine of € 2 500 was paid for five month
term in advance;
18. In the beginning of November 2014 company receives rent
for 3 months in advance, €3,000
19. At the end of the month Company repaid to the Bank credit
tranche € 500 and paid interest charges (interest rate as of 5%
p.a.)
20. Depreciation of equipment for December amounts to € 250.
21. ABC company acknowledged the € 1 500 worth of bad debts
in December 2014.
Required:
a) Prepare the opening journal entry on Dec. 1, 2014.
b) Prepare the journal entries for the transactions (1– 21) for the
month of December and post them to the T-accounts, opening
additional T-accounts for accounts as needed. Cross-reference
the entries using the numbers of the transactions above.
c) Prepare a trial balance.
d) Prepare the adjusting journal entries and record them at the
end of December in the T-accounts as well as in the trial
balance.
e) Prepare the closing entries for the temporary accounts and
the Income Statement.
f) Prepare the closing entries for the permanent accounts and
the Balance Sheet as of Dec. 31, 2014.
VIII.B. Valuation of Inventories
The inventory of ABC Company on November 30, 2014 shows

8. 500 units at € 100 per unit. A physical inventory on December
31, 2014, shows a total of 700 units on hand. Revenue from
sales for December totals € 300,000 (= 2,000 units at € 150 per
unit). The following purchases were made during December
2014:
Dec. 11: 1,100 units at € 110 per unit
Dec. 23: 700 units at € 115 per unit
Dec. 27: 400 units at € 135 per unit
Requirement:
1. Calculate the cost of goods sold for December 2014 and the
inventory cost as of December 31, 2014, using the FIFO method
and LIFO method.
2. Compute the gross profit for December 2014.
VIII.C. Valuation of Inventories
Assume a vendor of soft drinks starts out the week with no
inventory. He buys and sells cola as follows:
· Buys 5 cans on Monday for 40 cents
· Buys 4 cans on Tuesday for 30 cents
· Buys 2 cans on Wednesday for 50 cents
· Sells 10 cans on Thursday for 70 cents
Please shows the vendor’s cost of goods sold and ending
inventory under the four methods.
VIII.D. Cost of goods sold under the periodic system inventory
for 2015
The gross sales from whole 2015 period were € 2 500 and the
sales returns were 5%. Additionally the company is offering 4%
of cash discount of sales to their customers (the cash sales was
€ 1 000). At the beginning of the period December 31, 2014 the
merchandise inventory level was € 500 and during the year 2015
the company purchased € 1 500 of merchandise with 10% cash
discount (the cash purchases was € 500). Due to the low quality
of the merchandise the company agreed with the suppliers on €
200 purchase allowance. The freight –in cost for the 2015
period were € 50. The ending inventory as of December 31,

9. 2015 level was € 250. Please calculate cost of goods sold and
gross profit under the periodic system inventory for 2015.
AssetsEquities
Equipment 2 000Paid-in Capital 3 000
Land1 500Retained Earnings 1 800
Raw materials Inventory 1 800Loan Payable 2 500
Office Supplies Inventory 1 200Salary payables 1 500
Accounts Receivable3 200Accounts payable 3 400
Cash, Bank 4 500Unearned rent revenue2 000
Prepaid expenses 1 500
Allowance for
uncollectible accounts
1 500
Total assets15 700Total equities15 700
Balance Sheet on Nov. 30, 2014
Exercise V
The Accounting Cycle – Problem Set ABC Company Ltd.
Balance Sheet on Nov. 30, 2014
Assets
Equities
Equipment
2 000
Paid-in Capital
3 000
Land
2 500
Retained Earnings
1 000
Office Supplies Inventory
1 200
Loan Payable
2 400

10. Accounts Receivable
3 600
Tax payables
900
Cash, Bank
3 900
Accounts payable
3 700
Prepaid expenses
3 000
Salary payable
1 200
Unearned rent revenue
4 000
Total assets
16 200
Total equities
16 200
Summary of transactions during December:
1. Cash-Purchase of € 1 800 of Office Supplies Inventory
2. Performed consulting services, for which we received € 2,100
cash immediately.
3. Received an invoice for a series of advertisements, € 1 200,
that appeared in the local news during December and will be
paid in January.
4. Performed advertisement services for Customer XYZ, for
which we will receive € 3,000 on 2 month credit sale.
5. Paid salaries to employees of € 1 200 for December.
6. Received an invoice for external services of € 1 400 for
December to be paid with 60 credit term
7. Paid outstanding tax payables.
8. Paid trade creditors € 1,300.
9. Account for salaries that have been executed in December for

11. the amount of € 1 300.
10. The cost of office supplies used during December is €
1,100.
11. In the beginning of September 2014 a subscription rights for
local newspaper magazine of € 6 000 was paid for half-a year
term in advance;
12. In the beginning of October 2014 company receives rent for
6 months in advance, €6,000
13. At the end of the month Company repaid to the Bank credit
tranche 500 and paid interest charges (interest rate as of 10 %
p.a.)
14. Depreciation of equipment for December amounts to € 100.
Required:
a) Prepare the opening journal entry on Dec. 1, 2014.
b) Prepare the journal entries for the transactions (1. – 14) for
the month of December and post them to the T-accounts,
opening additional T-accounts for accounts as needed. Cross-
reference the entries using the numbers of the transactions
above.
c) Prepare a trial balance.
d) Prepare the adjusting journal entries and record them at the
end of December in the T-accounts as well as in the trial
balance.
e) Prepare the closing entries for the temporary accounts and
the Income Statement.
f) Prepare the closing entries for the permanent accounts and
the Balance Sheet as of Dec. 31, 2014.
Exercise IV
Accounting Cycle

12. The Accounting Cycle – Problem Set ABC Company Ltd.
Balance Sheet on Nov. 30, 2014
Assets
Equities
Equipment
2 500
Paid-in Capital
3 000
Land
1 000
Retained Earnings
2 400
Office Supplies Inventory
1 200
Loan Payable
1 000
Accounts Receivable
1 400
Tax payable
800
Cash, Bank
3 500
Accounts payable
2 400
Total assets
9 600
Total equities
9 600
Summary of transactions during December:
1. Cash-Purchase of €1,500 of Office Supplies Inventory
2. Performed consulting services, for which we received € 1,000
cash immediately.

13. 3. Received an invoice for a series of advertisements, € 200,
that appeared in the local news during December and will be
paid in January.
4. Performed additional consulting work, € 1 900 on credit.
5. Performed advertisement services, for which we received €
1,000 cash immediately.
6. Paid salaries to employees of € 700 for December.
7. Received an invoice for external services of € 400 for
December to be paid with 60 credit term
8. Paid outstanding tax in the amount € 800
9. Paid trade creditors € 1,300.
10. The cost of office supplies used during December is €
1,900.
11. At the end of the month Company repaid to the Bank credit
tranche 200 and paid interest charges (interest rate as of 9 %
p.a.)
12. Depreciation of equipment for December amounts to € 250.
Required:
a) Prepare the opening journal entry on Dec. 1, 2014.
b) Prepare the journal entries for the transactions (1. – 12) for
the month of December and post them to the T-accounts,
opening additional T-accounts for accounts as needed. Cross-
reference the entries using the numbers of the transactions
above.
c) Prepare a trial balance.
d) Prepare the adjusting journal entries and record them at the
end of December in the T-accounts as well as in the trial
balance.
e) Prepare the closing entries for the temporary accounts and
the Income Statement.
f) Prepare the closing entries for the permanent accounts and
the Balance Sheet as of Dec. 31, 2014.
Exercise IX

14. IX.A. Accounting Cycle
The Accounting Cycle – Problem Set ABC Company Ltd.
Summary of transactions during December:
1. Paid outstanding salary payables.
2. Paid outstanding trade creditors.
3. Salaries to employees of € 1 300 were calculated for
December to be paid in January.
4. Purchase of € 2 000 of Office Supplies Inventory with 10%
cash discount for cash transaction.
5. Purchase of raw materials Inventory of € 2 000 was done with
three month trade credit.
6. Due to the low quality of the purchased office supplies
inventory the company returned back € 200 of inventory that
diminished the accounts payable by that amount.
7. The freight in for both supplies and raw material inventory
was paid in the amount of € 400.
8. Performed advertisement services for Customer XYZ, for
which we will receive € 4,500 on 3 month credit sale.
9. At the end of month the Customer XYZ made a claim on the
advertisement services and we agreed to sales allowance (a
reduction of the original selling price) in the amount of 15%.
10. Received an invoice for a series of advertisements, € 2 000,
that appeared in the local news during December and will be
paid in January.
11. Received an invoice for external services of € 2 000 for
December to be paid with 60 credit term
12. Performed consulting services, in the amount of € 5,000
with 10% for cash discount on sales (cash immediately
received).
13. In November 2014 we performed additional consulting
work, € 2 000 on credit (10/30, n 90) and in December 2014 the
customer used the discount for prompt payment.
14. We sold office supplies inventory on the market for € 2500
through credit card transaction (a straight 5% of credit card
services were taken).

15. 15. The cost of office supplies used during December is € 800.
16. The cost of raw materials inventory used during December
is € 2 000.
17. In the beginning of October 2014 a subscription rights for
local newspaper magazine of € 3 000 was paid for three month
term in advance;
18. In the beginning of September 2014 company receives rent
for 5 months in advance, €5,000
19. At the end of the month Company repaid to the Bank credit
tranche € 1 000 and paid interest charges (interest rate as of
10% p.a.)
20. Depreciation of equipment for December amounts to € 50.
21. ABC company acknowledged the € 2 000 worth of bad debts
in December 2014.
Required:
a) Prepare the opening journal entry on Dec. 1, 2014.
b) Prepare the journal entries for the transactions (1– 21) for the
month of December and post them to the T-accounts, opening
additional T-accounts for accounts as needed. Cross-reference
the entries using the numbers of the transactions above.
c) Prepare a trial balance.
d) Prepare the adjusting journal entries and record them at the
end of December in the T-accounts as well as in the trial
balance.
e) Prepare the closing entries for the temporary accounts and
the Income Statement.
f) Prepare the closing entries for the permanent accounts and
the Balance Sheet as of Dec. 31, 2014.
IX.B. Valuation of Inventories
The inventory of ABC Company on November 30, 2014 shows
200 units at € 160 per unit. A physical inventory on December
31, 2014, shows a total of 400 units on hand. Revenue from
sales for December totals € 400,000 (= 2,000 units at € 200 per
unit). The following purchases were made during December

16. 2014:
Dec. 11: 900 units at € 175 per unit
Dec. 23: 900 units at € 165 per unit
Dec. 27: 400 units at € 180 per unit
Requirement:
1. Calculate the cost of goods sold for December 2014 and the
inventory cost as of December 31, 2014, using the FIFO method
and LIFO method.
2. Compute the gross profit for December 2014.
IX.C. Valuation of Inventories
Assume a vendor of soft drinks starts out the week with no
inventory. He buys and sells cola as follows:
· Buys 3 cans on Monday for 35 cents
· Buys 4 cans on Tuesday for 30 cents
· Buys 4 cans on Wednesday for 40 cents
· Sells 8 cans on Thursday for 60 cents
Please shows the vendor’s cost of goods sold and ending
inventory under the four methods.
IX.D. Cost of goods sold under the periodic system inventory
for 2015
The gross sales from whole 2015 period were € 4 500 and the
sales returns were 10%. Additionally the company is offering
10% of cash discount of sales to their customers (the cash sales
was € 2 500). At the beginning of the period December 31, 2014
the merchandise inventory level was € 900 and during the year
2015 the company purchased € 2 500 of merchandise with 15%
cash discount (the cash purchases was € 1 500). Due to the low
quality of the merchandise the company agreed with the
suppliers on € 500 purchase allowance. The freight –in cost for
the 2015 period were € 150. The ending inventory as of
December 31, 2015 level was € 500. Please calculate cost of
goods sold and gross profit under the periodic system inventory
for 2015.
AssetsEquities

17. Equipment 1 500Paid-in Capital 4 000
Land1 500Retained Earnings 1 300
Raw materials Inventory 1 500Loan Payable 3 000
Office Supplies Inventory 2 000Salary payables 1 400
Accounts Receivable3 000Accounts payable 2 400
Cash, Bank 5 600Unearned rent revenue2 000
Prepaid expenses 1 000
Allowance for
uncollectible accounts
2 000
Total assets16 100Total equities16 100
Balance Sheet on Nov. 30, 2014
Exercise VI
The Accounting Cycle – Problem Set ABC Company Ltd.
Assets
Equities
Equipment
4 000
Paid-in Capital
3 000
Land
10 200
Retained Earnings
1 000
Office Supplies Inventory
2 000
Loan Payable
4 800
Accounts Receivable
3 600
Tax payables
900

18. Cash, Bank
6 500
Accounts payable
4 100
Prepaid expenses
900
Salary payable
1 400
Unearned rent revenue
12 000
Total assets
27 200
Total equities
27 200
Summary of transactions during December:
1. Purchase of € 1 200 of Office Supplies Inventory with 60 day
credit term
1. Performed consulting services, for which we received € 3,900
cash immediately.
1. Received an invoice for a series of advertisements, € 1 500,
that appeared in the local news during December and will be
paid in January.
1. Performed advertisement services for Customer XYZ, for
which we will receive € 1,700 on 2 month credit sale.
1. Paid salaries to employees of € 1 000 for December.
1. Received an invoice for external services of € 1 300 for
December to be paid with 60 credit term
1. Paid outstanding tax payables.
1. Paid trade creditors € 2,300.
1. The cost of office supplies used during December is € 1,000.
1. In the beginning of September 2014 a subscription rights for
local newspaper magazine of € 1 200 was paid for whole year
term in advance;

19. 1. In the beginning of October 2014 company receives rent for 8
months in advance, €16,000
1. Salaries to employees of € 1 300 were calculated for
December to be paid in January.
1. At the end of the month Company repaid to the Bank credit
tranche 1,000 and paid interest charges (interest rate as of 10 %
p.a.)
1. Depreciation of equipment for December amounts to € 500.
Required:
a) Prepare the opening journal entry on Dec. 1, 2014.
b) Prepare the journal entries for the transactions (1. – 14) for
the month of December and post them to the T-accounts,
opening additional T-accounts for accounts as needed. Cross-
reference the entries using the numbers of the transactions
above.
c) Prepare a trial balance.
d) Prepare the adjusting journal entries and record them at the
end of December in the T-accounts as well as in the trial
balance.
e) Prepare the closing entries for the temporary accounts and
the Income Statement.
f) Prepare the closing entries for the permanent accounts and
the Balance Sheet as of Dec. 31, 2014.
Exercise II
Accounting Cycle
The Accounting Cycle – Problem Set ABC Company Ltd.
Balance Sheet on Nov. 30, 2014
Assets

20. Equities
Equipment
6 000
Paid-in Capital
5 000
Office Supplies Inventory
1 000
Retained Earnings
3 600
Accounts Receivable
1 000
Tax payable
1 000
Cash, Bank
8 600
Accounts payable
7 000
Total assets
16 600
Total equities
16 600
Summary of transactions during December:
1. Performed consulting services, for which we received € 2,000
cash immediately.
2. Received an invoice for a series of advertisements, € 600,
that appeared in the local news during December and will be
paid in January.
3. Performed additional consulting work, € 2 500 on credit.
4. Issued a check for € 800 for rent of shop space for December.
5. Performed advertisement services, for which we received €
1,000 cash immediately.
6. Paid salaries to employees of € 2,000 for December.
7. Paid outstanding tax € 1 000
8. Paid creditors € 2,800.

21. 9. The cost of office supplies used during December is € 450.
10. Depreciation of equipment for December amounts to € 150.
Required:
a) Prepare the opening journal entry on Dec. 1, 2014.
b) Prepare the journal entries for the transactions (1. – 10.) for
the month of December and post them to the T-accounts,
opening additional T-accounts for accounts as needed. Cross-
reference the entries using the numbers of the transactions
above.
c) Prepare a trial balance.
d) Prepare the adjusting journal entries and record them at the
end of December in the T-accounts as well as in the trial
balance.
e) Prepare the closing entries for the temporary accounts and
the Income Statement.
f) Prepare the closing entries for the permanent accounts and
the Balance Sheet as of Dec. 31, 2014.