Homework Answers
Accounting equation states that for a business,
Total Assets = Total liabilities + Shareholder’s equity
|
Date |
Assets |
= |
Liabilities |
+ |
Shareholder's equity |
|
|
1 |
1-Mar |
70,000 |
= |
0 |
+ |
70,000 |
|
2 |
2-Mar |
15,000 |
= |
15,000 |
+ |
0 |
|
3 |
3-Mar |
1,500-1,500 |
= |
0 |
+ |
0 |
|
4 |
3-Mar |
960-960 |
= |
0 |
+ |
0 |
|
5 |
4-Mar |
No entry |
||||
|
6 |
8-Mar |
1,200+800 |
= |
0 |
+ |
2,000 |
|
7 |
10-Mar |
1,200 |
= |
0 |
+ |
1,200 |
|
8 |
12-Mar |
5,000-5,000 |
= |
0 |
+ |
0 |
|
9 |
14-Mar |
No entry |
||||
|
10 |
15-Mar |
800-800 |
= |
0 |
+ |
0 |
|
11 |
17-Mar |
No entry |
||||
|
12 |
17-Mar |
No entry |
||||
|
13 |
18-Mar |
150+350 |
= |
0 |
+ |
500 |
|
14 |
22-Mar |
No entry |
||||
|
15 |
25-Mar |
-5,000 |
= |
-5,000 |
+ |
0 |
|
16 |
28-Mar |
-1,200 |
= |
0 |
+ |
-1,200 |
|
17 |
30-Mar |
1,200-1,200 |
= |
0 |
+ |
0 |
|
18 |
31-Mar |
-3,000 |
= |
0 |
+ |
-3,000 |
|
19 |
31-Mar |
No entry |
||||
|
20 |
31-Mar |
No entry |
1. Cash and land being assets increase total assets by 50,000 +20,000 = 70,000 and Shareholder’s equity (invested capital) increases by 70,000.
2. Machinery being asset increases by 15,000 and since it is purchased on account, liabilities increase by 15,000.
3. Office supplies being asset increases by 1,500 and since it is paid in cash so asset side only reduces by 1,500.
4. Insurance paid is for entire year, so it is prepaid insurance, which is an asset, so asset side increases by 960, and further cash reduces, so asset side only reduces by 960.
5. No entry since only a decision is made, no financial receipt or payment involved.
6. Services provided increases income and income accrues to owner, so 2,000 is added to shareholder’s equity. Further, 60% is received in cash, so cash increases by 1,200 (asset) and balance is also asset, but in the form of accounts receivable (800).
7. Service provided will increase shareholder’s equity by 1,200 and since it will be received later, so asset ‘accounts receivable’ increases by 1,200.
8. Office supplies increase and cash reduce. So asset side only increases and reduces by 5,000.
9. No entry since no financial receipt or payment involved.
10. Accounts receivable 800 get converted to cash 800. So asset side only increases and decreases by 800.
11. No entry since not related to business.
12. No entry since not related to business
13. Services provided 500 will increase shareholder’s equity, assets side increases by cash (150) and accounts receivable (350).
14. Since returned it back on same day, no changes in accounting equation
15. Cash (Asset side) reduces by 5,000 and liabilities (Accounts payable) also reduces by 5,000
16. Cash (asset) reduces by 1,200 and since it is drawings, shareholder’s equity also reduces by 1,200
17. Accounts receivable 1,200 get converted to cash. So, assets side only increases and reduces by 1,200.
18. Wages being an expense reduce net income, so will reduce shareholder’s equity and since paid in cash so assets (cash) reduce by 3,000.
19. No entry since no financial receipt or payment.
20. No entry since no financial receipt or payment.
|
Journal entries in the books of Mr. Mazin |
|||
|
Date |
Particulars |
Debit Amount (in RO) |
Credit Amount (in RO) |
|
1-Mar |
Cash |
50,000 |
|
|
Land |
20,000 |
||
|
Owner's Capital |
70,000 |
||
|
(Being owner's capital invested) |
|||
|
2-Mar |
Machinery & equipment |
15,000 |
|
|
Accounts Payable |
15,000 |
||
|
(Being machinery and equipment purchased on account) |
|||
|
3-Mar |
Office supplies |
1,500 |
|
|
Cash |
1,500 |
||
|
(Being office supplies purchased in cash) |
|||
|
3-Mar |
Prepaid insurance |
960 |
|
|
Cash |
960 |
||
|
(Being insurance pruchased for 1 year) |
|||
|
8-Mar |
Cash |
1,200 |
|
|
Accounts receivable |
800 |
||
|
Service revenue |
2,000 |
||
|
(Being services rendered for 2,000) |
|||
|
10-Mar |
Accounts receivable |
1,200 |
|
|
Service revenue |
1,200 |
||
|
(Being services provided on credit) |
|||
|
12-Mar |
Office supplies |
5,000 |
|
|
Cash |
5,000 |
||
|
(Being office supplies purchased in cash) |
|||
|
15-Mar |
Cash |
800 |
|
|
Accounts receivable |
800 |
||
|
(Being 800 accounts receivable received) |
|||
|
18-Mar |
Cash |
150 |
|
|
Accounts receivable |
350 |
||
|
Service revenue |
500 |
||
|
(Being service rendered in cash and on credit) |
|||
|
25-Mar |
Accounts payable |
5,000 |
|
|
Cash |
5,000 |
||
|
(Being accounts payable paid) |
|||
|
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answers for 7 and 8 please if you can do 9 and 10 that
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