Question

Section C: Long Question (SK2:15 marks - 1 x 15 marks] C1 - Transactions of Star Company for the month of January 2019 are presented below: 1. On January 1, 2019, the owner invested $75,000 cash in the business. 2. Purchased equipment for $35,000 cash. 3. Purchased supplies on account for $8,000. 4. Received a bill for $1,250 for advertising of the current month. 5. Provided $17,500 of programming services for customers. Star company received cash of $7,500 from customers, and billed the customers with the remaining amount. 0. Paid the following January expenses in cash: salaries $4,500, rent $3,000, and utilities $1,000 7. Paid its $1,250 advertising bill in cash. 8. The owner withdrew $6,500 in cash from the business for his personal use. Required: 1- Prepare journal entries to record the above transactions. (5 marks) 2- Post to the appropriate ledger accounts. (5 marks) 3- Prepare the trial balance of Star Company on January 31, 2019. (5 marks)

Answer 1

1. Journal Entries during the month of January

Entry	Debit Amount	Credit Amount
Cash A/c Dr. To Capital A/c	75000	75000
Equipment A/c Dr. To Cash A/c	35000	35000
Purchases A/c Dr. To Creditors A/c	8000	8000
Advertisement Expense A/c Dr. To Creditors A/c	1250	1250
Cash A/c Dr. Receivables A/c Dr. To Sales (Supply of services) A/c	7500 10000	17500
Salaries A/c Dr. Rent A/c Dr. Utilities A/c Dr. To Cash A/c	4500 3000 1000	8500
Creditors A/c Dr. To Cash A/c	1250	1250
Capital A/c Dr. To Cash A/c	6500	6500

2. Ledger Accounts

CY Cash Yc Dr 35 00 0 4500 By Eguipment 7 Salaries 75000 To Copital To Sales 7 1500 300 0 Rent A7 Io00 125o 6500 raditons 7 Cash 312S0 y balanca Yd Capital 7 CY Dr Cash e 6500 By 75000 To Cash 68S00 To bauance d faup mant Dr Cr To Cash 7c 35000 By balana Y 35000

Cr Punchases 7 Dr 2000 Creditors To 8000 Bbalance Y Cr Craditors 7 Dr bale 1250 y Purchases Adrertisement Exp To Cash 7 1250 To barance 8000

Advertisamant Expensa/ Cr Dr 1250 To Ouditons 1 250 balance /d Cr. Racaivables c Dr. To Salas 7 jo,000 balance d lo Oc

Cr Sales 4 Or 1500 Cash 7 10000 y Rasaivahles To bauana 11500 Cr Dr Salaries To Cash 4S00 4500 balanae d Rant Cr Dr To Cash 2 3 000 balance d 3000 utilities Cr Dr To Cash looo Q hakanca 1000

3. Trial Balance as on 31 January

Particulars	Debit Amount	Credit Amount
Cash A/c	31250
Capital A/c		68500
Equipment A/c	35000
Purchases A/c	8000
Creditors A/c		8000
Advertisement Expense A/c	1250
Receivables A/c	10000
Sales A/c		17500
Salaries A/c	4500
Rent A/c	3000
Utilities A/c	1000
Total	94000	94000