Question

Topic 1) ACCOUNTING AND THE BUSINESS ENVIRONMENT.

Have you ever dreamed of running of your own business? If so, where would you begin? How much money would you need? What type of business you plan to form? Or maybe, you would like to be an investor. There are a lot of decisions to make. And you don’t have to be an accountant to make a good decision, but understanding accounting can assist you to answer these questions.

Required:

1. You are required to form a small service business (e.g printing, labeling, laundry, cleaning services etc.)

2. Explain the name and nature of the business, location, mission and objectives of the company. Assume the business started on 1 January 2019. (5m)

3. List down the transactions incurred during the first month of operation. The transactions should cover relationship between the following accounting elements.

1. Asset and Equity - 1 transaction.
2. Asset and Asset - 1 transaction.
3. Asset and Liability - 1 transaction.
4. Asset and Owner’s Equity (Revenue)- 3 transactions.
5. Asset and Owner’s Equity (Expens - 2 transactions.
6. Liability and Owner’s Equity (Expense) - 1 transaction .
7. Asset and Owner’s Equity (Withdrawal) - 1 transaction.

TOPIC 2: RECORDING BUSINESS TRANSACTIONS

The procedure of accounting equation works well for handful transactions, but it is not very efficient if your business generates lots of transactions. The more efficient way to capture business transactions is by using the proper recording business transactions, account.

Required:

Based on requirement in Topic 1, prepare:

1. journal entry for each of the transaction (Please include the transaction on 1 January 2019- first investment)
2. post the transaction to the t-accounts and balance off accounts
3. Trial balance as at 31st January 2019.

Answer 1

I want to start a Small printing press. I will take rent of small building to run my busines. For this kind of business I need to invest in equipment or machine like mini offset, laser printer, lable inkjet printer, computrer and design software, cutting machine, and office furniture, so the intial capital will be around $ 20000

Business Plan for Small Printing Press

Name : The Print Sprint

Nature of business: Color and black & white printing, screen printing of brochures, labels, newsletters, postcards, memo pads, business order forms, checks, maps, T-shirts, and packaging.

Location : In rented building situated in market area.

Mission : To be one stop-shop for printing solutions at affordable price with exceptional quality.

Objectives : This business paln is to articulate our activities so as to:

1. Achieve constant growth in turnover.
2. Generate customer satisfaction and
3. Provide quality product at reasonable price with exeptional services.

List of transaction incurred during the first month of operation

a) Asset and Liability: On 1st Jan, 2019 Introduction of capital into business of $ 20000

b) Asset and Asset : On 3rd Jan, 2019 Purchasing of Machines and Equipments of $ 16000

c) Asset and Liabilities : On 4th Jan, 2019 Taking working capital loan from the bank of $ 2000

d) Assets and Onwer's Equity (Revenue) :

1) On 7th Jan, 2019 Service provided to customer and charged $300 for printing service and received check

2) On 8th Jan, 2019 Service provided to customer and charged $ 300 for printing service and received check.

3) On 10th Jan, 2019 Service provided to customer and charged $300 for printing service credit.

e) Asset and Owner' Equity (Expense) :

1) On 5th Jan, 2019 Purcahsing of papers of $ 1000 and paid by check.

2) On 5th Jan, 2019 Purchasing of Ink for $ 1500 and paid by check.

f) On 31st Jan, 2019 Rent payable of $ 500

g) On 31th Jan, 2019 Amount withdrwan for personal use of $ 200

Jounal Enteries for the above transactions

Date	Particulars	Debit($)	Credit($)
01.01.2019	Bank Account	20000
	To Capital or Onwer's Equity		20000
	(Being capital Introduced into business)
03.01.2019	Machine and Equipment Account	16000
	To Bank Account		16000
	(Being Machine and equipment purchased for business)
04.01.2019	Bank Account	2000
	To Working Capital Loan or OD		2000
	(Bieng working capital loan taken from the bank)
05.01.2019	Printing Papers (Expenses)	1000
	To Bank Account		1000
	(Being papers purchased for printing)
05.01.2019	Ink Account (Expense)	1500
	To Bank Account		1500
	(Being ink purchased)
07.01.2019	Bank Account	300
	To Service Revenue		300
	(Being fees charged for service rendered)
08.01.2019	Bank Account	300
	To Service Revenue		300
	(Being fees charged for service rendered)
10.01.2019	Debtors	300
	To Service Revenue		300
	(Being fees receivable from customer for service rendered)
31.01.2019	Rent Account	500
	To Rent Payable		500
	(Being rent payable for the month of Jan)
31.01.2019	Drawings Account	200
	To Bank Account		200
	(Being amount withdrwan for personal use)
	Total	42100	42100

Bank Account

	$		$
To Capital Account	20000	By Machine & Equipment	16000
To Working Capital Loan	2000	By Printing Papers	1000
To Service Revenue	600	By Ink	1500
		By Drawings	200
		By Balance c/d	3900
	22600		22600

Capital Account

	$		$
To Drawings	200	By Bank Account	20000
To Balance c/d	19800
	20000		20000

Machine & Equipment

To Bank Account	16000	By Balance c/d	16000
	16000		16000

Printing Papers Account (Expenses)

To Bank Account	1000	By Income Statement	1000
	1000		1000

Ink Account

	$		$
To Bank Account	1500	By Income Statement	1500
	1500		1500

Rent Account

	$		$
To Rent Payable	500	By Income Statement	500
	500		500

Working Capital Loan Account

		By Bank Account	2000
To Balance c/d	2000
	2000		2000

Trial Balance

		Dr. ($)	Cr. ($)
1	Bank Account	3900
2	Capital		19800
3	Machine & Equipment	16000
4	Printing papers	1000
5	Ink	1500
6	Debtors	300
7	Working Capital Loan		2000
8	Rent	500
9	Rent Payable		500
10	Service Revenue		900
	Total	23200	23200