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📝 Practice Problems

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01 A=L+E · DEBITS/CREDITS

The Accounting Equation & Debits/Credits

Scenario: "TechStart Inc." For each transaction, identify which accounts are affected, increase/decrease, Dr or Cr.

Owner invests $30,000 cash
Purchase equipment for $15,000 cash
Borrow $10,000 from bank
Perform services for $5,000 cash
Pay $1,500 January rent
Purchase $2,000 supplies on credit

#	Account 1	Dr/Cr	Account 2	Dr/Cr
1	Cash (A↑)	Dr $30K	Owner's Capital (E↑)	Cr $30K
2	Equipment (A↑)	Dr $15K	Cash (A↓)	Cr $15K
3	Cash (A↑)	Dr $10K	Bank Loan Payable (L↑)	Cr $10K
4	Cash (A↑)	Dr $5K	Service Revenue (E↑)	Cr $5K
5	Rent Expense (E↓)	Dr $1.5K	Cash (A↓)	Cr $1.5K
6	Supplies (A↑)	Dr $2K	Accounts Payable (L↑)	Cr $2K

✅ A-D-E accounts ↑ with Debit. Everything else with Credit.

02 JOURNAL ENTRIES

Write Full Journal Entries

Write journal entries for these August transactions:

Aug 1	Owner invested $25,000 cash
Aug 5	Purchased equipment for $8,000 cash
Aug 8	Performed services for $3,500 cash
Aug 12	Billed a client $4,000 for services
Aug 18	Received $2,000 from that client
Aug 22	Paid $600 for utilities
Aug 29	Owner withdrew $500

Aug 1 Dr Cash $25K

Cr Owner's Capital $25K

Aug 5 Dr Equipment $8K

Cr Cash $8K

Aug 8 Dr Cash $3.5K

Cr Service Revenue $3.5K

Aug 12 Dr AR $4K

Cr Service Revenue $4K

Aug 18 Dr Cash $2K

Cr AR $2K

Aug 22 Dr Utilities Exp $600

Cr Cash $600

Aug 29 Dr Drawings $500

Cr Cash $500

✅ Each entry: at least 1 Dr, 1 Cr, Dr = Cr.

03 T-ACCOUNTS · TRIAL BALANCE

T-Accounts & Trial Balance

Using Problem 2 entries, create Cash T-account and ending balance. Then prepare trial balance.

Cash T-Account:

Dr (+)		Cr (−)
Aug 1:$25K, Aug 8:$3.5K, Aug 18:$2K		Aug 5:$8K, Aug 22:$600, Aug 29:$500
Total Dr: $30,500		Total Cr: $9,100
Ending Cash: $30,500−$9,100=$21,400 Dr

Trial Balance:

Account	Dr	Cr
Cash	$21,400
AR	$2,000
Equipment	$8,000
Owner's Capital		$25,000
Drawings	$500
Service Rev		$7,500
Utilities Exp	$600
Total	$32,500	$32,500

✅ Dr = Cr ✓

04 P-U-A-A-D-S · ADJUSTING ENTRIES

Write the 6 Adjusting Entries

Dec 31 year-end. Write adjusting entries:

Prepaid: Paid $18K Sep 1 for 1yr insurance (4mo used)
Unearned: Received $24K Oct 1 for 12mo consulting (3mo earned)
Accrued Exp: Employees earned $8K Dec 28-31
Accrued Rev: Completed $4.5K work, not billed
Depreciation: Equipment $48K, 8yr life, $0 residual
Supplies: Account $3.2K, count shows $800 left

1. Dr Insurance Exp $6K

Cr Prepaid Ins $6K

4/12×$18K=$6K. P=Prepaid→Dr Exp/Cr Asset

2. Dr Unearned Rev $6K

Cr Consulting Rev $6K

3/12×$24K=$6K. U=Unearned→Dr Liability/Cr Rev

3. Dr Salaries Exp $8K

Cr Salaries Pay $8K

A=Accrued Exp→Dr Exp/Cr Payable

4. Dr AR $4.5K

Cr Service Rev $4.5K

A=Accrued Rev→Dr Rec/Cr Rev

5. Dr Depreciation Exp $6K

Cr Accum Depr $6K

$48K/8yr=$6K. D=Depreciation.

6. Dr Supplies Exp $2.4K

Cr Supplies $2.4K

$3.2K−$800=$2.4K. S=Supplies.

05 P-U-A-A-D-S · PARTIAL YEAR

Partial Year Adjusting Entries

Paid $9,600 Apr 1 for 2yr insurance (9mo this year?)
Received $36,000 Aug 1 for 18mo service (5mo earned?)
Bought $75K equip Jul 1, 10yr life, $5K residual. Depr for THIS year (6mo)?

1. Dr Ins Exp $3,600

Cr Prepaid Ins $3,600

$9.6K/24mo=$400/mo × 9mo = $3,600

2. Dr Unearned Rev $10K

Cr Service Rev $10K

$36K/18mo=$2K/mo × 5mo = $10K

3. Dr Depr Exp $3,500

Cr Accum Depr $3,500

($75K−$5K)/10=$7K/yr × 6/12=$3.5K

✅ Always calculate monthly rate first, then multiply by months used.

06 CLOSING ENTRIES

Write the 4 Closing Entries

Account	Balance
Service Revenue	$45K Cr
Salaries Exp	$22K Dr
Rent Exp	$8K Dr
Insurance Exp	$3K Dr
Depr Exp	$5K Dr
Dividends	$4K Dr

1. Dr Service Rev $45K

Cr Income Summary $45K

2. Dr Income Summary $38K

Cr Salaries $22K, Rent $8K, Ins $3K, Depr $5K

3. Dr Income Summary $7K

Cr Retained Earnings $7K

NI=$45K−$38K=$7K

4. Dr Retained Earnings $4K

Cr Dividends $4K

07 FINANCIAL STATEMENTS

RE Statement & Equity

From Prob 6 data (Rev $45K, Exp $38K, NI $7K, Div $4K, Beg RE $12K) + Common Shares $50K. Prepare RE Statement and Equity section.

Beginning RE	$12,000
+ NI	$7,000
− Div	($4,000)
= Ending RE	$15,000

Equity Section:

Common Shares	$50,000
Retained Earnings	$15,000
Total Equity	$65,000

✅ Order: IS → RE Statement → BS

08 FIFO · AVERAGE COST

Inventory Costing

Calculate COGS & End Inv under (a) FIFO and (b) Avg Cost.

Date	Event	Units	$/Unit
Mar 1	Beg	20	$15
Mar 8	Purchase	15	$18
Mar 15	Sale	18
Mar 22	Purchase	12	$20
Mar 29	Sale	10

FIFO: Mar 15 sale: 18×$15=$270. Remaining: 2@$15+15@$18=$300. Mar 29 sale: 2@$15+8@$18=$174. Remaining: 7@$18+12@$20=$366. Total COGS: $444. End Inv: $366.

Avg Cost: After Mar 8: 35u/$570, avg=$16.29. Mar 15 sale: 18×$16.29=$293.22. After Mar 22: 29u/$516.86, avg=$17.82. Mar 29 sale: 10×$17.82=$178.20. End: 19@$17.82=$338.66. Total COGS: $471.42. End Inv: $338.66.

✅ Prices rising → FIFO has higher NI (lower COGS).

09 BANK RECONCILIATION

Full Bank Reconciliation

Bank=$8,400. Books=$6,100. Dep transit $2,500. Outst checks $900. Service chg $35. Interest $25. NSF $120. Error: $400 recorded as $340.

Bank	$	Book	$
Balance	8,400	Balance	6,100
+Dep transit	+2,500	+Interest	+25
−Outst chk	−900	−Service	−35
		−NSF	−120
		+Error	+60
Adj	10,000	Adj	10,000

JEs: Dr Cash $25/Cr Int Rev $25. Dr Bank Chg $35/Cr Cash $35. Dr AR $120/Cr Cash $120. Dr Cash $60/Cr Expense $60.

✅ Only book side needs entries.

10 DEPRECIATION 3 METHODS

All Three Methods

Machine $75K, residual $5K, 5yr life, 50K total units. Yr1 usage: 12K units. Yr2: 15K units. Calc SL, UOP, DDB for Yr1 and Yr2.

SL: ($75K−$5K)/5 = $14K/yr. Yr1:$14K, Yr2:$14K.

UOP: $70K/50K=$1.40/unit. Yr1:12K×$1.40=$16.8K. Yr2:15K×$1.40=$21K.

DDB: Rate=2/5=40%. Yr1:$75K×40%=$30K. Yr2:$45K×40%=$18K.

Entry: Dr Depr Exp / Cr Accum Depr (same for all methods).

11 SCF · RATIOS

Cash Flow & Ratios Speed Round

A — CFO: NI=$80K, Depr=$12K, Gain=$4K, AR↑$9K, Inv↓$6K, AP↑$7K, SalPay↓$3K. Calc CFO.

B — Ratios: Sales=$500K, COGS=$300K, NI=$93K, Avg AR=$50K, Avg Inv=$75K. GPM? Rec Turn? Inv Turn? Profit Margin?

CFO: $80K+$12K−$4K−$9K+$6K+$7K−$3K=$89K

GPM: ($500K−$300K)/$500K=40%. Rec Turn: $500K/$50K=10×. Inv Turn: $300K/$75K=4×. Profit Margin: $93K/$500K=18.6%.

✅ CA↑=Subtract. CL↑=Add. Depr always +Add.

10:00-10:45	Wake up, shower, breakfast, coffee ☕
10:45-11:00	Setup — open this page, get ready
🔵 BLOCK 1: Foundation (2h) — 40% of exam
11:00-11:10	Quick read Ch 1 (A=L+E)	READ
11:10-11:35	Problems 1, 2 & 3 — Foundation Practice Block	CORE
11:35-11:40	A-D-E Memory Aid refresher	SKIM
11:40-11:55	☕ Break
11:55-12:35	🎬 P-U-A-A-D-S Video + Ch 3 content	CRITICAL
12:35-12:55	Problems 4 & 5 — Adjusting Entries	CRITICAL
12:55-1:10	🍎 Real break — walk, snack
🟢 BLOCK 2: Cycle & Statements (1.5h) — 25% of exam
1:10-1:25	🎬 Closing Entries video + Ch 4 content	HIGH
1:25-1:40	Problems 6 & 7 — Closing & Statements	HIGH
1:40-1:55	Ch 1-4 Quiz: Do all quiz questions	HIGH
1:55-2:30	🍝 Lunch — full break
🟡 BLOCK 3: Mid-Tier Topics (2h) — 25% of exam
2:30-2:50	🎬 FIFO video + Ch 6 content + Problem 8	HIGH
2:50-3:10	🎬 Bank Rec video + Ch 7 + Problem 9	HIGH
3:10-3:40	Read Depreciation Ch 9 + Problem 10	MED
3:40-4:00	Ch 5,6,7,8,9 quizzes + flashcards	MED
4:00-4:15	☕ Power break
🔴 BLOCK 4: Rapid Fire (1h) — 10% of exam
4:15-4:35	🎬 Cash Flow video + Ch 11 + Problem 11	MED
4:35-5:00	Ch 10,12 + Cram Sheet + all ratios	MED
5:00-5:20	🎯 Review wrong answers. Re-do hardest problems.	KEY
5:20-5:30	🏆 Done! 90%+ covered. You pass.	DONE

📋 Sunday Marathon Schedule

📝 Practice Problems

The Accounting Equation & Debits/Credits

Write Full Journal Entries

T-Accounts & Trial Balance

Write the 6 Adjusting Entries

Partial Year Adjusting Entries

Write the 4 Closing Entries

RE Statement & Equity

Inventory Costing

Full Bank Reconciliation

All Three Methods

Cash Flow & Ratios Speed Round

📖 Study Chapters

📕 Cram Sheet

P-U-A-A-D-S

Depreciation

SCF Operating

Inventory Errors

Closing Entries

Key Ratios

Bonds

Interest