Question

1. Measure business activities:

a. Record the below transactions in appropriate T-accounts. Use the following
list of accounts:
Assets: Cash and bank; Trade receivables; Purchases/Inventory; Office
equipment.
Liabilities: Trade payables; Bank loan payable.
Equity: R.Rowan - Capital; Drawings; Sales revenue; Salary expense; Rent
expense; Utilities expense.
b. Balance off the T-accounts.
c. Prepare the trial balance as at 31 December 2018.

Rob Rowan set up a retailing business selling garden accessories, called ‘Rowan
Garden’ on 1 November 2018. During November and December 2018, the following
business events took place:
1) Nov. 1 Rob Rowan invested €60,000 in the business.
2) Nov. 2 He rented part of a building to use as an office and storerooms and paid
rent in the total amount of €12,000 for the following 6 months.
3) Nov. 3 Bought equipment for the office for €24,000 paying immediately.
4) Nov. 5 Purchased garden accessories to the inventory from a supplier for
€15,000 on credit.
5) Nov. 10 Sold garden accessories to a customer for €14,000 on credit.
6) Nov. 15 Purchased garden accessories from a supplier for €10,400 on credit.
7) Nov.18 Paid the supplier for Nov. 5 purchase.
8) Nov. 19 Received payment from the customer on Nov. 10 sale.
9) Nov. 30 Took a 5-year bank loan of €30,000.
10) Dec. 1 Sold garden accessories to a customer for €18,000 on credit.
11) Dec. 5 Paid salaries to employees of €7,000.
12) Dec. 7 Paid the supplier half the amount owed for the purchase of Nov. 15.
13) Dec. 16 Rob Rowan withdrew €15,000 from the business and used €5,000 of
this to install a swimming pool in his own garden.
14) Dec. 30 Paid €800 for 2 months’ electricity, telephone, water, etc.

Answer 1

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Working - Journal Entries:
Date	Account	Debit	Credit
Nov 1	Cash and Bank	£          60,000
Nov 1	R.Rowan - Capital		£        60,000
Nov 2	Rent Expense	£            4,000		(12000/6*2)
Nov 2	Prepaid Rent	£            8,000
Nov 2	Cash and Bank		£        12,000
Nov 3	Office Equipment	£          24,000
Nov 3	Cash and Bank		£        24,000
Nov 5	Purchases/Inventory	£          15,000
Nov 5	Trade Payable		£        15,000
Nov 10	Trade Receivable	£          14,000
Nov 10	Sales Revenue		£        14,000
Nov 15	Purchases/Inventory	£          10,400
Nov 15	Trade Payable		£        10,400
Nov 18	Trade Payable	£          15,000
Nov 18	Cash and Bank		£        15,000
Nov 19	Cash and Bank	£          14,000
Nov 19	Trade Receivable		£        14,000
Nov 30	Cash and Bank	£          30,000
Nov 30	Bank Loan Payable		£        30,000
Dec 1	Trade Receivable	£          18,000
Dec 1	Sales Revenue		£        18,000
Dec 5	Salaries Expense	£            7,000
Dec 5	Cash and Bank		£          7,000
Dec 7	Trade Payable	£            5,200		10400/2
Dec 7	Cash and Bank		£          5,200
Dec 16	R.Rowan - Drawing	£          15,000
Dec 16	Cash and Bank		£        15,000
Dec 30	Utility Expense	£                800
Dec 30	Cash and Bank		£              800

Part a and b:

Cash and Bank
Debit		Credit
Nov 1	£    60,000	Nov 2	£        12,000
Nov 19	£    14,000	Nov 3	£        24,000
Nov 30	£    30,000	Nov 18	£        15,000
		Dec 5	£          7,000
		Dec 7	£          5,200
		Dec 16	£        15,000
		Dec 30	£              800
Ending	£    25,000
Trade Receivable
Debit		Credit
Nov 10	£    14,000	Nov 19	£        14,000
Dec 1	£    18,000
Ending	£    18,000
Purchases/Inventory
Debit		Credit
Nov 5	£    15,000
Nov 15	£    10,400
Ending	£    25,400
Office Equipment
Debit		Credit
Nov 3	£    24,000
Ending	£    24,000
Bank Loan Payable
Debit		Credit
		Nov 30	£        30,000
		Ending	£        30,000
Trade Payable
Debit		Credit
Nov 18	£    15,000	Nov 15	£        10,400
Dec 7	£      5,200	Nov 5	£        15,000
		Ending	£          5,200

R Rowan Capital
Debit		Credit
Nov 1	£ 60,000
Ending	£ 60,000
R Rowan Drawing
Debit		Credit
		Dec 16	£ 15,000
		Ending	£ 15,000
Sales Revenue
Debit		Credit
		Nov 10	£ 14,000
		Dec 1	£ 18,000
		to Income Summary	£ 32,000
Salaries Expense
Debit		Credit
Dec 5	£    7,000
to Income Summary	£    7,000
Rent Expense
Debit		Credit
Nov 2	£    4,000
to Income Summary	£    4,000
Prepaid Rent
Debit		Credit
Nov 2	£    8,000
Ending	£    8,000
Utilities Expense
Debit		Credit
Dec 30	£        800
to Income Summary	£        800

Part c

Accounts	Debit	Credit
Cash and Bank	£          25,000
Trade Receivable	£          18,000
Prepaid Rent	£            8,000
Purchases/Inventory	£          25,400
Office Equipment	£          24,000
Trade Payable		£              5,200
Bank Loan Payable		£           30,000
R.Rowan - Capital		£           60,000
R.Rowan - Drawing	£          15,000
Rent Expense	£            4,000
Salaries Expense	£            7,000
Sales Revenue		£           32,000
Utility Expense	£                800
Total	£       127,200	£         127,200