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Use the Following information for the Question Numbers 5 to 10. Mr. Mazin started a business...

Use the Following information for the Question Numbers 5 to 10.
Mr. Mazin started a business in the month of March 2020. He has to prepare a financial statement at the end of the month for review of the operation of his business. The following transactions are given below. You are required to help Mr. Mazin to prepare his financial statement.

March 1. Invested a cash of RO 50,000 and land worth RO 20,000 to start a new business
March 2. Purchased machinery and other equipment’s on account RO 15,000
March 3. Purchased office supplies for cash RO 1,500
March 3. Purchased insurance policy for the building RO. 960 for one year.
March 4. Decided to recruit a helper next month.
March 8. Provided services to a client RO 2,000 and received 60% of the amount and remaining after two months
March 10. Service provided to another client Mr. Salim RO 1,200 but he agreed to pay later.
March 12. Purchased Office supplies for cash RO 5,000
March 14. Mr. Mazin agreed to purchase a new machinery for RO 5,800 in the month of December 2020.
March 15. Received remaining cash from the client services provided on March 8th .
March 17. He purchased a new car RO 12,000 for personal use with his own money.
March 17. He purchased a new television for RO 889 with the money given by his father.
March 18. Provided services to another client for RO 500 and he paid only RO. 150 remaining, he agreed to pay next month.
March 22. Purchased a packing machine and returned it back on the same day as it was defective OMR 299.
March 25. Paid cash RO. 5000 for the machinery purchased on March 2nd .
March 28. Took money from the business for personal use RO 1,200
March 30. Received amount from the customer whose service is provided on March10th..
March 31. Paid wages for the month RO 3000
March 31. Planned to purchase additional office supplies for RO 4,580 next month.
March 31. Received water and electricity bill for the month RO. 89.

From the above transaction you are required to prepare:
5. Analyze the transaction by using accounting equation. (0.5 Mark*13 = 6.5 marks)
6. Prepare the Journal entries for the month of March. (0.25 for each account= 7 marks)
7. Post the entries and calculate the balances. (0.5 Mark*13 = 6.5 marks)
8. Use the balances to prepare the unadjusted trial Balance.
9. After completing the Unadjusted trial balance use the below information to prepare the Adjusted Trial Balance.
Additional information
a. The revenue earned but not recorded at the end of the month is RO 2,000
b. Insurance expense for the month RO 80
c. The machinery has a useful life of 5 years and a residual value of RO 500.
d. Office supplies at the end of the month 3200.
e. Depreciation on all fixed asset to be provided 6% of the asset value.

Solutions

Expert Solution

5 Date
Date Assets = Liabilities + Equity
Cash + Accounts receivable + Office supplies + Prepaid insurance + Land + Machinery & Equipment = Accounts payable + Mazin's capital - Drawings
Mar 1. 50000 + + + + 20000 + = + 70000 -
Mar 2. + + + + + 15000 = 15000 + -
Mar 3. -1500 + + 1500 + + + = + -
Mar 3. -960 + + + 960 + + = + -
Mar 4. No entry required = + -
Mar 8. 1200 + 800 + + + + = + 2000 -
(2000*60%) + (2000*40%) + + + + = + -
Mar 10. + 1200 + + + + = + 1200 -
Mar 12. -5000 + + 5000 + + + = + -
Mar 14. No entry required = + -
Mar 15. 800 + -800 + + + + = + -
Mar 17. No entry required = + -
Mar 17. No entry required = + -
Mar 18. 150 + 350 + + + + = + 500 -
Mar 22. No entry required since it is returned on the same day = + -
Mar 25. -5000 + + + + + = -5000 + -
Mar 28. -1200 + + + + + = + - 1200
Mar 30. 1200 + -1200 + + + + = + -
Mar 31. -3000 + + + + + = + -3000 -
Mar 31. No entry required = + -
Mar 31. + + + + + = 89 + -89 -
Bal. 36690 350 6500 960 20000 15000 10089 70611 1200
6 Journal entries:
Date Account titles Debit Credit
Mar 1. Cash 50000
Land 20000
Mazin's capital 70000
(Invested cash and land in business)
Mar 2. Machinery & Equipment 15000
Accounts payable 15000
(Purchased machinery & equipment)

ekkarill92 answered 2 years ago
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