Question

	Requirement #2 Record journal entries
	John Leclair opened his investment advisory business as a proprietary company (JL Advisors Pty Ltd) on 1 January 2018. He has provided you with the following summary information for the first 12 months of operations. All cash receipts and payments have occurred as indicated in the summary. John expects to pay income taxes of 35% on the company’s profits.
		Transaction Summary
	01-January-2018	Open business bank account with transfer of personal funds	$270,000
	02-January-2018	EFT for rental of office space. Immediate occupancy. 48 months at $2500 per month.	$120,000
	20-January-2018	Office equipment purchased for cash to get discount from the retail price of $67,000.	$60,000
	20-January-2018	The office equipment will be replaced in 5 years at an expected cost of $80,000.	$80,000
	22-January-2018	Bank loan approved and credited to account. Payable in 2021	$310,000
	30-May-2018	Credit sales. EFT payment to be received in 90 days.	$80,000
	07-June-2018	Employee timesheets submitted for work performed. Payment (EFT) to be made in 7 days.	$5,600
	01-July-2018	Cash sales.	$30,500
	07-December-2018	Credit sales. EFT payment to be received in 90 days.	$30,000
	25-December-2018	Employee timesheets submitted for work performed. Payment (EFT) to be made in 7 days.	$6,160
	EFT = electronic funds transfer
	You may assume that credit sales "to be received in 90 days" are received in exactly 90 days and that EFT wage payments are made in exactly 7 days.

1. BALANCE SHEET as at 31 December 2018

2. INCOME STATEMENT for the 12 months ended 31 Dec 2018

3. STATEMENT OF CASH FLOW for the 12 months ended 31 Dec 2018

4. GENERAL JOURNAL showing all journal entries

5. GENERAL LEDGER for the 12 months ended 31 Dec

Answer 1

JL Advisors Pty Ltd JL Advisors Pty Ltd Balance Sheet Income Statement For the Year Ended December 31, 2018 At December 31,2018 Sales 140,500 Assets Less: Operating expenses: Current assets: Cash Rent expense 30,000 504,900 Wages expense 11,760 Accounts receivable 30,000 Depreciation expense-office equip. 13,400 Prepaid rent 90,000 Total current assets 624,900 Total Operating Expenses 55,160 Fixed assets: Offcie equipment Add: Non-Operating Income: 67,000 Discount received 7,000 Less: Accumulated depreciation 13,400 53,600 Total fixed assets 53,600 Total assets $678,500 Total Non-Operating Income 7,000 Net income bfore income tax Liabilities and Owners' Equi 92,340 Less: Income tax (92340*35%) Current liabilities: 32,319 Net income Wages payable 92,340 6,160 Tax pyable 32,319 Total current liabilities 6,160 Non-current liabilities: Notes payable 310,000 Total non-current liabilities 310,000 Owners' equity Capital 270,000 Net income 92,340 Total owners' equity Total liabilities and owners' equity 362,340 $678,500

JL Advisors Pty Ltd Statement of Cash Flow (Direct Method) For the Year Ended December 31, 2018 Cash flow from rating activities: Add: Cash Receipts Collection from debtors 80,000 Cash sales 30,500 110,500 Less: Cash Paymen it is expected to pay tax at 35% but not paid Cash paid for rent Cash paid for wages 120,000 5,600 So it is not taken in the cash Flow Statement. 125,600 (15,100) Cash flow from operating activities Cash flow from investing activities: 0 Less: Purchase of office equipment 60,000 (60,000) Cash flow from investing activities Cash flow from financing activities: Capital contribution 270,000 Loan taken from bank 310,000 580,000 Cash flow from financing activities Change in Cash Add: Cash at the beginning of the year Cash at the end of the year 580,000 504,900 ctivate Win Go to PC settings t 504,900

Account Titles and tion Debit o. Date 4 1-Jan Cash 270,000 270,000 Capital To record the capital contribution) 2-Jan Rent expense (2500*12) Prepaid rent (2500 36) 30,000 90,000 Cash 120,000 To record the rent expense paid) 20-Jan Offcie equipment 67,000 Discount received 7,000 Cash 60,000 To record the purchase of office equipment) 22-Jan Cash 310,000 Notes payable 310,000 (To record the bank loan taken) 30-May Accounts recievable 80,000 Sales 80,000 (To record the credit sales) 7-Jun Wages expense 5,600 Wages payable 5,600 To record the wages expense accrued) 14-Jun Wages payable 5,600 Cash 5,600 To record the wages paid) 1-Jul Cash 30,500 Sales 30,500 To record the cash sales)

30-Aug Cash 80,000 Accounts receivable 80,000 (To record the collection from debtors) 7-Dec Accounts recievable 30,000 Sales 30,000 To record the credit sales) 25-Dec Wages expense 6,160 Wages payable 6,160 (To record the wages expense accrued 31-Dec Depreciation expense -office equip. (67000/5) Accum Depr ofcie equip To record the depreciation on office equiment) 13,400 The equipmet will be replaced in 5 years at a price higher than its cost (80,000 is greater than 67,000). 13,400 Thus it needs to be depreciated fully in 5 years without any residual value. The credit seles on 12/7/2018 will be received in 2019 The wages expense on 12/25/2018 will be paid in 2019 s these are not recored

Posting the entries into the corresponding ledger accounts. Prepaid rent Cas CR CR CR 30,000 Beginning Bal. Rent expense Beginning Bal. Beginning Bal. Capital 270,000 Prepaid rent 10,000 Offcie equipment 30,500 Wages payable 90,000 Cash 30,000 Cash 90,000 Notes payable 60,000 Sales 5,600 80,000 receivable Ending Bal Ending Bal Ending Bal 504,900 30,000 90,000 690,500 690,500 $30,000 530,000 $ 90,000 $90,000 offci s recievable CR Wa CR ex Beginning Bal. Beginning Bal. Cash 80,000 Beginning Bal. Discount received Sales Wages payable 7,000 80,000 5,600 60,000 Cash Sales 30,000 Wages payable 6,160 Ending Bal. 67,000 Ending Bal. 30,000 Ending Bal 11,760 67,000 67,000 $110,000 110,000 $11,760 11,760 CR Beginning Bal. Accum. Depr. offcie equip 13,400 Ending Bal 13,400 13,400 $ 13,400

ble Notes Beginning Bal. Beginning Bal. Beginning Bal Cash 270,000 Offcie equipment 7,000 Cash 310,000 Ending Bal. Ending Bal. Ending Bal 310,000 270,000 7,000 $270,000 310,000 270,000 7,000 7,000 310,000 Sales Wa Accum. Depr.-offcie CR Beginning Bal. Cash 5,600 Beginning Bal. Beginning Bal Depreciation expense -office Accounts recievable 80,000 Wages expense 5,600 equip. 13,400 Cash 30,500 6,160 Wages expense Accounts recievable 30,000 Ending Bal. 140,500 Ending Bal Ending Bal. 6,160 13,400 140,500 11,760 13,400 140,500 11,760 13,400