Question
Tidepool Design Studio is a small graphic-design business. Record these three transactions from March 2026:
- Mar 3 — Designed a logo for a client and sent an invoice for $1,200. The client will pay next month.
- Mar 10 — Bought a printer for $800 on credit from OfficeHub, to be paid in 30 days.
- Mar 20 — Paid the March office rent of $500 in cash.
Required: Prepare the journal entry for each transaction. Use these accounts: Accounts Receivable, Service Revenue, Equipment, Accounts Payable, Rent Expense and Cash.
How to enter it:
- Each transaction gets its own date box — type the day (for Mar 3 type 3).
- First line: the account to debit, amount in the Debit column. Next line: the account to credit, amount in the Credit column.
- A narration under each entry is optional — the model answer shows one for every entry.
Remember: an asset or an expense goes up with a debit; a liability or revenue goes up with a credit.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 — Presentation of Financial Statements
Work the cycle in its fixed order: journalise, post to the ledger, extract an unadjusted trial balance, pass adjusting entries, extract an adjusted trial balance, prepare the statements, then close the temporary accounts. Each step consumes the output of the one before it, so an error early on propagates all the way to the closing entries rather than staying local.
Common mistakes
- Preparing the financial statements from the unadjusted trial balance instead of the adjusted one.
- Closing permanent accounts — assets, liabilities and capital carry forward; only revenue, expense and drawings/dividends close.
- Forgetting that the post-closing trial balance should contain no income statement accounts at all.
Further readingIAS 1: what goes where in a full set of statements