Question

t Preaurg the statemaw for BANYAN Compary for the year ended Question 2 The following transactions took place in Landmark Company in its first year of operations (From 1 January 2016 till 31 December 2016) - The Business received $600,000 cash from investors. In return, 400,000 ordinary shares were issued of S1 par value. The authorized share capital for the business is 2- The premises are rented at an annual rental of $9,600. During the year rent of $9,000 3- Salaries paid during the year totaled $32,500 to cover the period from 1 January 2016 4- Electricity bills paid during the year totaled S5,000. At the end of the year (December 5- The company paid $180,000 to acquire property, plant and equipment at 1 April 500,000 ordinary shares. was paid to the owners of the premises. until 31 January 2017 31, 2016) the company had $500 of electricity incurred but not paid for 2016. The new PPE has an estimated useful life of 10 years and a residual value of $5,000.The Company uses the straight line method for depreciating non-current assets. 6 Inventories totaling $170,000 (34,000 units, each unit costing $5) were purchased on 7- Inventories totaling $120,000 (20,000 unit, each unit costing S6) were purchased for 8 The company sold 30,000 units for $12 each and received cash (cost of goods sold account. (In February 2016) cash. (In April 2016) -2222) 9- The company sold 15,000 units for $12 each on credit (cost of goods sold-????) 10- Receipts from accounts receivable totaled $150,000. 11-Payments to accounts payable totaled $140,000. 12-The company paid S1,500 for advertising and marketing during the year. 13- A dividend of $ 4,500 was paid to the owners. 14-The Company changed its authorised share capital from 500,000 to 550,000 ordinary shares 15-In addition to selling inventory the company provides consultancy services and in September 2016 received $60,000 cash from customers for services to be provided in the next 6 months. At the year-end (December 31, 2016), two thirds of this amount were earned (the services provided). Required 1- Record the above transactions using the extended accounting equation template assuming that the company uses the first in first out method to value merchandise inventory Prepare a table showing the ending balances of all the relevant accounts and indicate whether the account is an asset, liability, equity, revenue, expense or dividend. 2-

Answer 1

FIFO
	Goods Purchased		Costs of goods sold			Inventory balance
Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of Goods sold	# of units	Cost per unit	Inventory Balance
Opening						0	0	0
February '16	34000	5				34000	5	170000
April'16	20000	6				34000	5	170000
						20000	6	120000
			30000	5	150000	4000	5	20000
						20000	6	120000
			4000	5	20000
			11000	6	66000	9000	6	54000
Totals	54000		45000	5.24	236000	9000	6	54000

	Amount ($)	Classification
Issued Capital 400,000 shares at $1 par	400,000	Equity
Paid in Capital in excess os par	200,000	Equity
Total Equity	600,000
Rent Payable	600	Liability
Electricity bill payable	500	Liability
Accounts Payable	30,000	Liability
unearned revenue	20,000	Liability
Accumulated Depreciation- PPE	13,125	Liability
Total Liabilities	64,225
Cash	677,500	Asset
Prepaid Salary	2,500	Asset
Inventory	54,000	Asset
Accounts Receivable	30,000	Asset
Property Plant and equipment	180,000	Asset
Total Assets	944,000
Sales revenue	540,000	Income
consultancy fees earned	40,000	Income
Tota Income	580,000
Rent expense	9,600	Expense
Salary ( for 12 months)	30,000	Expense
Electricity expense	5,500	Expense
Depreciation expense- PPE ( for 9 months)	13,125	Expense
Costs of Goods sold	236,000	Expense
Advertising Expense	1,500	Expense
Total Expense	295,725
Dividend	4,500	Dividend