Question

SECTION C - LONG QUESTION (35 marks) Your company Orange Fruits Limited (OFL) sells exotic imported fruit. On 31 December 2013, OFL's balance sheet showed the following amounts: Orange Fruits Limited Balance Sheet Month ending 31 December 2013 LIABILITIES & OWNERS' EQUITY Accounts Payable 2,196 Unearned Revenues 2,000 ASSETS Cash Accounts Receivables Allowance for bad debts Inventories Supplies Notes Receivable Total Assets 22,500 12,000 (1,343) 9,861 4,428 10,000 57,446 Share Capital Retained Earnings Total Liability & Equity 50,000 3,250 57,446 REQUIREMENT 1: Journalize the following transactions, all occurring during 2014: January 1: Pay S6,000 cash for 6 months of rent, beginning on 1 January 2014

Answer 1

Journal Entries

Debit ($) Credit (5) ► 5.000 13 6.000 5.770 2,000 4,200 6,200 2,900 100 2.900 100 500 Date General Journal 01-Jan-14 Rent Expense 01-Jan-14 Prepaid Rent 01-Jan-14 Cash 08-Jan-14 inventories 08-Jan-14 Cash 12-Jan-14 Unearned Revenue 12-Jan-14 Accounts Receivable 12-Jan-14 Sales Revenue 12-Jan-14 Cost of Goods Sold 12-Jan-14 Freight Out 12-Jan-14 Inventories 12-Jan-14 Accounts Payable 13-Jan-14 Supplies 13-Jan-14 inventories 18-Jan-14 Cash 18-Jan-14 Bad Debts 18-Jan-14 Accounts Receivable 25-Jan-14 Accounts Payable 25-Jan-14 Cash 31-Jan-14 Salaries and Wages 31-Jan-14 Cash 31-Jan-14 Supplies Expenses 31-Jan-14 Supplies 31-Jan-14 Interest Receivable 31-Jan-14 Interest Income 31. Jan.14 Allowance for Bad Debts 31-Jan-14 Bad Debts 500 5.200 1,200 1,200 4,000 4.000 1,128 1.128 150 150

T Accounts (For Working)

1,000 5,000 5,770 1,200 4,000 10,230 27,200 Cash 01-Jan To Bal B/F 22,500 01-Jan BY Rent Expense 18-Jan To Accounts Receivable 4,700 01-Jan By Prepaid Rent 08-Jan BY Inventories 25-Jan By Accounts Payable 31-Jan By Salaries and Wages 31-Jan By Bal C/F 27,200 Accounts Receivable 01-Jan To Bal B/F 12,000 18-Jan BY Cash 12-Jan To Sales Revenue 4,200 18-Jan BY Bad Debts 31-Jan By Bal C/F 16,200 Allowance for Bad Debts 31-Jan. To Bad Debts 43 01-Jan By Bal B/F 31-Jan To Bal C/F 1,300 1,343 Inventories 01-Jan To Bal B/F 9,861 12-Jan BY Cost of Goods Sold 08-Jan To Cash 5,770 13-Jan BY Supplies 31-Jan By Bal C/F 15,631 4,700 500 11,000 16,200 1,343 1,343 2,900 500 12,231 15,631

01-Jan To Bal B/F 13-Jan To Inventories Supplies 4,428 31-Jan BY Supplies Expense 500 31-Jan By Bal C/F 1,128 3,800 4,928 4,928 01-Jan To Bal B/F 10,000 10,000 25-Jan To Cash 31-Jan To Bal C/F 2,196 100 2,296 12-Jan To Sales Revenue 2,000 2,000 Notes Receivable 10,000 31-Jan By Bal C/F 10,000 Accounts Payable 1,200 01-Jan By Bal B/F 1,096 12-Jan By Freight Out 2,296 Unearned Revenue 2,000 01-Jan By Bal B/F 2,000 Prepaid Rent 5,000 31-Jan By Bal C/F 5,000 Rent Expense 1,000 31-Jan By Income Statement 1,000 Sales Revenue 6,200 12-Jan By Accounts Receivable 12-Jan By Unearned Revenue 6,200 01-Jan To Cash 5,000 5,000 01-Jan To Cash 1,000 1,000 31-Jan To Income Statement 4,200 2,000 6,200

12-Jan To Inventories 2,900 2,900 12-Jan To Accounts Payable 100 100 18-Jan To Accounts Receivable 43 457 500 Cost of Goods Sold 2,900 31-Jan By Income Statement 2,900 Freight Out 100 31-Jan By Income Statement 100 Bad Debts 500 31-Jan BY Allowance for Bad Debts 31-Jan By Income Statement 500 Salaries and Wages 4,000 31-Jan By Income Statement 4,000 Supplies Expenses 1,128 31-Jan By Income Statement 1,128 Interest Receivable 150 31-Jan By Bal C/F 150 Interest Income 150 31-Jan By Interest Receivable 150 31-Jan To Cash 4,000 4,000 31-Jan To Supplies 1,128 1,128 31-Jan To Interest Income 150 150 31-Jan To Bal C/F 150 150

Income Statement

Amount Particulars Revenue Sales Revenue Interest Income Total Revenue 6,200 150 6,350 Expenses Cost of goods sold Freight Out Rent Expense Supplies Expense Bad Debts Salaries and Wages Total Expenses Net Loss 2,900 100 1,000 1,128 457 4,000 9,585 -3,235

Balance Sheet

Amount 1,096 50,000 15 Assets Cash Accounts Receivable Allowance for Bad Debts Inventories Supplies Notes Receivable Interest receivable Prepaid Rent Total Assets Amount Liabilities & Net Assets 10,230 Accounts Payable 11,000 Unearned Revenue -1,300 Share Capital 12,231 Retained Earnings 3,800 Opening 10,000 Loss for the year 150 5,000 51,111 Total Liabilities and Share Capital 3,250 -3,235 51,111