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2022-23 Semester 1

ACCT2003 Principles of Accounting I

Hand-In Assignment 1

All students are expected to observe UIC’s academic honesty policy.  Specifically, you are expected to complete this assignment on your own without copying the work from other student(s) and without allowing other student(s) to copy your work.  Plagiarized work will receive zero mark.

There are TWO questions in this assignment.  To complete the assignment, students are required to have some readings or self-study. Students should not just rely on the PPT.

Due Date: To be announced by your teacher

Late submission will not be accepted.

Please follow the instructions below:

1. You must use Microsoft Word or Excel to complete the assignment OR handwrite the answers on A4 white papers and scan them as one PDF file. Apart from Microsoft Word, Excel, or PDF file, other files CANNOT be accepted.

2. After finish, please submit a soft copy of your completed assignment to the Assignment-1’s dropbox on iSpace, AND hand in a hard copy of your completed assignment to the assistant instructor.

3. The soft copy of your completed assignment should follow this file naming format: “your section number + your name + your student number”.

4. Type your student ID number, full name and section number at the top left corner of page 1.

5. Answer both questions.

6. Show the question number and part number of the question clearly.

Question 1 (20 marks)

Part A (18 marks)

Rowdy Bolton opened a consulting company called “Stark” on November 1. During November, the company completed the following transactions.

Required:

1. Prepare journal entries to record these transactions (use account titles listed in part 2. below).

Explanations/Narratives are not required for journal entries.
(8 marks)

2. Open the following ledger accounts: Cash (101); Accounts Receivable (105); Office Supplies (122); Prepaid Insurance (161); Building (172); Land (180); Accounts Payable (201); Notes Payable (240); Unearned Service Revenue (225); R. Bolton, Capital (301); R. Bolton, Withdrawals (302); Services Revenue (401); Salaries Expense (501), and Utilities Expense (503).

Post the journal entries from part 1. to the ledger accounts, using the following header for each account:

(8 marks)

3. Prepare a trial balance as of November 30.                                                                 (2 marks)

Part B (2 marks)

What is a trial balance? Why does the firm prepare a trial balance? (2 marks)

Question 2 (20 marks)

The unadjusted trial balance and the adjustment data for McLay Business Agent are shown below, along with adjusting entry information.

Additional information items:

a. The Prepaid Insurance account consists of a payment for a 1-year policy. An analysis of the insurance invoice indicates that one half of the policy has expired by the end of the December 31 year-end.

b. A cash payment for space sublet for 8 months was received on July 1 and was credited to Unearned rent.

c. Accrued interest expense on the note payable of $1,000 as of December 31 has been incurred but not paid.

Required

1. Record the adjusting entries for McLay Business Agent as of December 31.                          (6 marks)

2. a. Show the calculation for total assets, total liabilities, and owner's equity without the adjustments (without preparing the balance sheet).

b. Show the calculation for total assets, total liabilities, and owner's equity with the adjustments (without preparing the balance sheet).

(9 marks)

3. Comparing your two answers of part 2, which one provides the most accurate presentation of the balance sheet and why?  Which accounting principle(s) would have been violated if the adjustments had not been made?                                                                                                                             (5 marks)