Question

Shield Inc. is a new small business begun o a leading provider of IT services an s a new small business begun on September 1, 2019, by Tony Stark. The company is ng provider of IT services and communication technology. The following is a selected list ransactions that occurred during the month of September 2019: tember 1: Tony deposited $10,000 in a bank account in the name of Shield Inc. All we company's common shares were issued to him. He paid $500 in legal and related fees to incorporate Shield Inc. and these incorporation costs were considered an expense. September 1: Shield Inc. issued a cheque for $2.400 for an insurance policy for one year beginning September 1, 2019. September 1: Tony presented a business plan to the bank, and the bank loaned Shield Inc. $10,000 which was immediately deposited in Shield Inc.'s bank account. Interest on the loan was 10%, and was payable in six months. September 1: Tony purchased a used car for $7.500, paying cash, to travel to job sites. The expected useful life of the car is 4 years, after which time it will be worth nothing. The straight-line method of depreciation is used. is used. September 4: Shield Inc, signed a contract to provide IT services to a local high school, and received a $100 deposit. September 6: Shield Inc. signed a contract to provide IT services to Wakanda Inc., and received a $500 deposit. September 10: Tony hired Natasha Romanova at a total salary of $2,000 per month. She will start work on September 15th. September 11: Shield Inc. spent all day troubleshooting a network outage at the local high school, and presented an invoice to the principal for $1,500 (less the $100 deposit) at the end of the day. Payment is due in 30 days. September 13: Shield Inc. purchased $2,000 of office supplies on credit. Payment is due within 30 days. Tony said there was $1,200 worth of supplies left on hand at the end of the month of September. September 16 - September 19: Tony and Natasha spent four days setting up new computers for Hulk Automobiles. Tony submitted an invoice for $4,500, due in 30 days. September 22 - September 30: Tony and Natasha spent their time trying to generate new business. Tony paid $400 on gas and oil for the car during September.

Answer 1

1. Journal Entries for the month ending September 30, 2019.

Date	Name of the account	Debit ($)	Credit ($)
Sep 1,2019	Bank Account	10,000
	To Share Capital Account		10,000
	(For Amount deposited in bank account and shares issued)
Sep 1,2019	Preliminary Expenses Account	500
	To Bank Account		500
	(For Legal and other charges paid)
Sep 1,2019	Insurance Expenses Account	200
	Prepaid Expenses Account	2200
	To Bank Account		2400
	(For insuarance expenses paid for 1 Year)
Sep 1,2019	Bank Account	10000
	To Short Term Loan		10000
	(For loan deposited in bank account)
Sep 4,2019	Car Account	7500
	To Bank Account		7500
	(For car purchased)
Sep 4,2019	Bank Account	100
	To Deposits from clients account		100
	(For deposits received)
Sep 6,2019	Bank Account	500
	To Deposits from clients account		500
	(For deposits received)
Sep 10,2019	No entry required
Sep 11,2019	Accounts receivable Account	1400
	Deposits from clients account	100
	To Revenue from Operations		1500
	(For invoice raised)
Sep 13,2019	Office Supplies Account	2000
	To Accounts Payable Account		2000
	(For office supplies purchased on credit)
Sep 19 ,2019	Accounts receivable Account	4500
	To Revenue from Operations		4500
	(For invoice raised)
Sep 30,2019	Car Maintenance Expenses A/c	400
	To Bank A/c		400
	(For car maintenance expenses paid)
Sep 25,2019	Accounts receivable Account	2400
	Bank Account	600
	To Revenue from Operations		3000
	(For invoice raised and cheque received for 20%)
Sep 30,2019	Salary Expense Account	1000
	To Liability for Expenses		1000
	(For salary payable for 15 Days)
Sep 30,2019	Depreciation A/c	157
	To Car A/c		157
	(For Depreciation Charged for 1 month)
Sep30,2019	Interest Expense A/c	84
	To Short Term Loan A/c		84
	(For Interest charged @10% for 1 month)
	($10,000*10%*1/12)

2. Income Statement for the month ending September 30,2019.

Particulars	Amount ($)
Revenue from Operations	7500
Total revenue	7500
Expenses
Cost of Materials Consumed	800
($2000 - $1200)
Finance Charges	84
Depreciation	157
($7500/4 years)*1/12
Salary Expenses ($2000 *15/30)	1000
Car Maintenance Expenses	400
Insuarnce Expenses	200
Preliminary Expenses	500
Total Expenses	3141
Profit/(Loss) for the period before tax	4359