Question

Issue 18 08 2011 Revision Date 2 5,06201 8 Assignment # 1 Question 1 Ahmed started his new business on Junuary,1, N. Identify each transaction by number. You must give the explanations of each transaction. 1. The owner, Ahmed, invests S100,000 in cash in starting a real estate office operating as a sole proprietorship 2. Purchased computer for $8,000, paying $4,000 in cash and signed a 30-day, note payable for the balance 3. Paid $600 in cash for the current month's rent. 4. Purchased $800 supplies on credit 5. Paid $800 cash on account for office supplies purchased in transaction4 6. Real estate commissions billed to customers amount to $2,500 7. Received a bill from the advertising agency S600 for advertising for the current month. 8. Received cash for $2,500 from a client in payment on account for commissions billed in 9. 10. transaction 6 Paid $1,000 cash for officer's salaries. Ahmed withdrew S 1500 from the business for personal expenses Instructions: 1- Journalyze the above transactions. 2- Post Journal entries to general ledger 3- Prepare trial balance 4- Prepare income statement, owner equity statement and balance sheet. (10 marks)

Answer 1

Accounts Title Debit $1,00,000 S.No Credit 1 Cash Ahmed's Capital $1,00,000 2Computer 8,000 Cash Notepayable 4,000 4,000 3 Rent Expenses Cash 600 600 4 Supplies 800 Accounts payable 800 5 Accounts payable 800 Cash 800 6 Accounts receivable 2,500 Service Revenue 2,500 7 Advertising Expenses 600 Advertising Expenses Payables 600 8 Cash 2,500 Accounts receiveable 2,500 9 Salary expenses 1,000 Cash 1,000 10 Ahmed's drawing 1,500 Cash 1,500

Particulars Ahmed's Capital Accounts receivable$ 2,500 Rent Expenses Cash Amount Particulars $ 1,00,000 Computer Amount $ 4,000 $600 Accounts Payables Salary expenses Ahmed's drawing Closing Balance 800 $1,000 $ 1,500 $ 94,600 $1,02,500 $1,02,500 Ahmed's Capital Amount Particulars $1,00,000 Cash $ 1,00,000 Particulars Amount 1,00,000 $ 1,00,000 Closing Balance Particulars Cash Notes Payables Computer Amount Particulars $ 4,000 Amount $4,000 Closing balance $8,000 $ 8,000 $ 8,000 Notes Payables Amount Particulars Particulars Amount Computer 4,000 Closing Balance 4,000 $ 4,000 $ 4,000

Particulars Cash Rent expenses AmountParticulars $ 600 Income Statemen600 Amount S 600 $600 Supplies AmountParticulars Particulars Amount Accounts Payables 800 Closing balance $ 800 $ 800 $ 800 Particulars Cash Accounts Payables AmountParticulars $ 800 Supplies Amount $ 800 800 $800 Accounts receiveable AmountParticulars Particulars Amount Service Revenue$2,500 $ 2,500 $ 2,500 Cash $2,500 Service Revnue AmountParticulars Particulars Amount Income Statement $2,500Accounts receiveal $ 2,500 $2,500 $2,500

Particulars Cash Ahmed'S drawing Amount Particulars $ 1,500 Amount $ 1,500 $ 1,500 Ahmed's Capital $ 1,500 Advertising Expenses Amount Particulars Particulars Amount Advertising expenses Payable 600 Income Statement 600 $ 600 $ 600 Advertising expenses payables Amount Particulars Particulars Amount Closing balnce $ 600 Advertising Expenses600 $ 600 $600 Salary expenses Amount Particulars Particulars Cash Amount $ 1,000 Income Statement $ 1,000 $ 1,000 $ 1,000

Trail Balance Particulars Debit Credit Cash Ahmed's Capital Ahmed's Drawing Advertising Expenses Advertising Expenses payables salary Expenses Rent expenses Computer Notes Payables Service Revenue Supplies $ 94,600 1,00,000 $ 1,500 $600 $ 1,000 $8,000 $600 600 $ 4,000 $2,500 800 $1,07,100 $ 1,07,100

Income Statement Particulars Service Revenue Less: Advertising Expenses600 salary Expenses Rent expenses Amount Amount $2,500 1,000 2,200 S 300

Balance Sheet Assets Amount Liabilities Amount Cash Supplies Total Current Assets$95,400 Total Current Liabilities Computer $94,600 Advertising Expenses payables $ 4,000 4,600 $ 98,800 800 Notes Payables 8,000 Ahmed's Capital (Refer Note) $ 1,03,400 $1,03,400

Note Opening Capital $ 1,00,000 Less: Drawings 1,500 Add:Net Income 300 $ 98,800