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ACCOUNTING EXERCISE-ASSIGNMENT OVERVIEW The primary goals of this exercise are: Understand the concept of a dual-entry accounting system: practice recording financial transactions in a system that requires each transactions to be recorded twice. Identify the 5 major Accounts used by accountants. These accounts are: 1. 2. Asset Liability Owner's Equity Revenue Expenses (resources that exit the firm-i.e., purchasing inventory, paying payroll, purchasing supplies, purchasing equipment, etc.) STEP 2 ACCOUNTING EXERCISE-PRACTICE J.D. Lawn Service Started a lawn service by investing $10,000 cash, a used lawn tractor (valued at $2,000) and a used truck and trailer at $6,000. 1. Purchased supplies for the lawn tractor, gas and oil along with some spare parts valued at $500. 2. 3. Mowed five lawns the first month and received S800 cash and billed $300 to the monthly customer. 4. Expensed gas and other supplies of $250. Paid the wages of a part-time employce for the month $300. Purchaseda 5. lawn tractor for $5,000 paying $1,000 cash and the balance with a note 6. a new 7. Customer paid on his account the amount owed in transaction #3 (above). 8. Withdrew S800 for personal use. 9. Paid miscellaneous expenses, S300. 10. Purchased office supplies 11. Paid truck repair, $275. 12. Mowed 6 more lawns for customers. Billed the charges for S1,200. on credit, $250. ACCOUNTING EXERCISE B& B Driving Range Betsy and Bill, local golf stars, opened the B & B Driving Range on March 1. 1. They invested $10,000 of their cash savings in the business. 2. A caddy shack was constructed for cash at a cost for $4,000. 3. An additional $800 was spent on golf balls and golf clubs. 4. Bill and Betsy leased five acres of land at a cost of $1,000 per month and paid the first month's rent. 5. During the first month, advertising costs totaled $750 of which $150 was unpaid on March 31. 6. The members of the golf team were paid $400 for retrieving golf balls 7. On March 15, Betsy and Bill withdrew a total of $800 in cash for personal living expenses. 8. A S100 utility bill was received on March 31 but it was not paid before the end of the month. Instructions: (Use the worksheet supplied for this exercise.) Hint: there are a total of 8 transactions required. (17 points total) NOTE: You are only required to post the 8 transactions BUT for an added challenge, answer the following: All fees from customers were deposited in the company's bank account. On March 31, the balance in the company's bank account was $8,550. Betsy and Bill thought they had a pretty good first month of operations. However, their estimates of profit for March ranged from a loss of $1,450 to a net profit of $3,900. Compute the balance sheet and income statement totals, (5 points extra) b. What were sales for the month of March? (1 point extra) Compute the actual net profit or loss for March. (1 point extra) C
