| Year 1 | | | | Year 2 | | | Note: |
| Date | Transaction | | | Date | Transaction | | 1. For year 1, assume the beginning balance of each account is $0.
2. Please do not forget to book adjusting entries for such accounts as interest payable, interest receivable, depreciation, and other accrued and deferred balances. All adjusting entries could be booked at the end of the year.
3. For year 2, the beginning balance of each account is the ending balance of year 1 after closing. Please do not forget to book closing entries to arrive at the correct ending balances for both years. |
| 01/01 | Borrowed $10,000 from a bank with an APR of 2% and a five-year term. Accrued interest is payable on the first day on January each year. | | | 01/01 | Paid $3,000 in advance to rent an office for three years. The office was in use immediately after the payment. |
| 01/01 | Paid $1,000 in advance to rent an office for 1 year. The office was in use immediately after the payment. | | | 01/01 | Paid down accrued interest of $200 for the note. |
| 02/01 | Issued 20,000 shares of $1 par value common stock for cash at $3 per share. | | | 02/01 | Split the company's stock 2-for-1. |
| 03/01 | Hired one employee to run the business. The monthly salary is $200 and he is paid semi-annually (e.g. twice a year). His first day of work is April 1 and his first pay-day is September 30. | | | 03/31 | Paid and terminated the employee. |
| 03/05 | Purchased merchandise on account from Floyd Co., $4,000, terms FOB shipping point, 2/10, n/30. The transportation cost is $120 in cash. | | | 03/31 | Received cash in advance for merchandise from Vix Co., $10,000. All merchandise is expected to be shipped to Vix within the next year. |
| 03/30 | Purchased merchandise on account from Kramer Co., $8,500, terms FOB destination, 1/10, n/30. The transportation cost is $100. | | | 05/31 | Used all supplies on hand. |
| 03/31 | Sold merchandise on account to C. F. Howell Co., list price $25,000, terms 2/20, n/30. The cost of the merchandise sold was $9,000. | | | 06/30 | Lent $10,000 to Brahms Co. with an interest rate of 5% and a five-year term. Accrued interest is payable on the first day on July each year. |
| 03/31 | Purchased office supplies for cash, $150. | | | 10/01 | Shipped merchandise to Vix Co., $5,000, terms FOB destination. The transportation cost $100 in cash. The cost of the merchandise shipped is $1000. |
| 04/01 | Returned merchandise purchased on March 30 from Kramer Co., $1,300. | | | 11/01 | Sold the rest merchandise in inventory to customers and made cash sales of $10,000, terms FOB shipping point. The transportation cost $100 in cash. |
| 04/01 | Purchased a delivery truck for $20,000, paying cash. The truck has a useful life of 10 years. The double-declining method of depreciation is used. | | | 12/31 | Declared dividend of $0.1 on all current outstanding shares, payable on January 31 of next year. |
| 04/02 | Paid Floyd Co. on account for purchase of March 5. | | | 12/31 | Received the electricity bill from West Penn Power in the amount of $200. It is not due until January 15 of next year. |
| 04/08 | Paid Kramer Co. on account for purchase of March 30, less return of April 1. |
| 04/15 | Received cash on account from sale of March 31 to C. F. Howell Co. |
| 06/01 | Paid garage $50 for an oil change to the truck. |
| 09/19 | Purchased 5,000 shares of common stock to be held in the treasury for $4 per share. |
| 10/17 | Sold 3,000 shares of treasury stock purchased on September 19 for cash at $5 per share. |
| 11/01 | Declared a dividend of $0.1 on all current outstanding shares, payable on 12/31. |
| 12/31 | Supplies on hand amounted to $100. |
| 12/31 | Sold the truck purchased on April 1 for $12,000. |
| 12/31 | Received the electricity bill from West Penn Power in the amount of $200. It is not due until January 15 of next year. |
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