Question

In: Accounting

Task 2 requires you to accurately complete the activities described in each question. Complete the answers...

Task 2 requires you to accurately complete the activities described in each question. Complete the answers in your own Excel document, putting your name at the top along with the Task and Task letter appropriate to each answer and submit below for your Assessor.

a) Make the Journal entry to record the sale of merchandise that cost $6,000, for $10,000 cash.

b) Record journal entries for the following transactions.

  • Purchased office furniture for $3,200, agreed to pay the entire amount in 2 years
  • Purchased computers for the office for $1,200 cash
  • Paid for rent for the next 3 months, $600
  • Purchased office supplies for $75 cash
  • Purchased inventory on credit for $15,000
  • Paid $11,000 to the supplier for the inventory purchased in previous bullet point
  • Hired employees who will begin work in 2 weeks.

c) Record journal entries for the following transactions. After recording the transactions, prepare a ‘T-account’ and balance the accounts payable account.

  • Purchased manufacturing equipment for $20,000 cash
  • Purchased office furniture on credit, $2,700
  • Paid for insurance for the next 6 months, $2,200
  • Purchased inventory on credit, $15,000
  • Purchased supplies for cash, $100
  • Paid the supplier $14,000 for inventory purchased on credit
  • Invested $3,000 in a short-term investment.

d) A company had the following transactions during the first month of operations. Record journal entries for these transactions. Determine the balance in the cash account at the end of the first month.

  • Purchased inventory to be sold to customers, $45,000 on credit
  • Rented warehouse space, $6,000 was paid for this month
  • Sold $5,000 of inventory on credit (you have not been paid yet), sales price of $7,500
  • Acquired office furniture for $3,000 cash
  • Paid $12,000 to employees who worked this month
  • Acquired manufacturing equipment costing $39,000, paid cash
  • Paid $700 for cleaning
  • Received a $100 utility bill for this month
  • Collected $7,500 owed from customers.

e) A company had the following transactions during the first month of operations. Record journal entries for each transaction. Determine the balance in the cash account at the end of the first month.

  • Borrowed $150,000 cash from the bank. $30,000 is to be repaid at the end of each year for the next 5 years
  • Purchased inventory; $30,000 to be paid in 30 days
  • Rented warehouse space; $2,000 was paid for this month
  • Paid $300 for advertising to be run equally over this month and the next 2 months
  • Purchased computer equipment; paid $3,000 and put $2,000 on credit
  • Employees worked and earned $3,900; employees were paid $3,300
  • Sold $15,000 of inventory on credit for a sales price of $25,000
  • Purchased $500 of office supplies on credit, not yet used
  • Acquired manufacturing equipment costing $55,000; paid ½ up front and agreed to make monthly payments for the balance for 3 years
  • Paid $25,000 on accounts owed
  • Collected $10,000 from customers for amounts owed
  • Received $1,200 from a customer for services to be performed next month.

Solutions

Expert Solution

a) Name: XXXXX
Task: Journal entry
Task Letter: To record a journal entry for the sale of merchandise
Particulars Amount in $
Cash A/c Dr 10000
To sale of merchandise A/c Cr 6000
To profit on sale of merchandise A/c Cr 4000
(Being merchandise sold for a profit of $4000)
b) Name: XXXXX
Task: Journal entries
Task Letter:
Particulars Amount in $
Office furniture A/c Dr 3200
To accounts payable A/c Cr 3200
(Being office furniture purchased on credit payable after a period of 2 years)
Computers A/c Dr 1200
To cash a/c Cr 1200
(Being computers purchased against cash)
Rent A/c Dr 600
To cash A/c Cr 600
(Being office rent paid -3months )
Ofice expenses A/c Dr 75
To cash a/c Cr 75
(Being office supplies purchased)
Purchases A/c Dr 15000
To Trade Payables A/c Cr 15000
(Being inventory purchased on credit)
Trade payables A/c Dr 11000
To cash a/c Cr 11000
(Being cash paid against the inventory purchased)
No entry for hiring the employees, since the employees hasn't earned nor productive
c)
Particulars Amount in $
Equipment A/c Dr 20000
To cash a/c Cr 20000
(Being manufacturing equipment purchased against cash)
Office furniture A/c Dr 2700
To Accounts Payable A/c Cr 2700
(Being office furniture purchased on credit )
Prepaid Insurance premium A/c Dr Dr 2200
To cash a/c Cr 2200
(Being insurance premium paid for the next 6 months treated as prepaid as on the month end)
Purchases A/c Dr 15000
To Trade Payables A/c Cr 15000
(Being inventory purchased on credit)
Office expenses A/c Dr 100
To cash a/c Cr 100
(Being office supplies purchased-assumption)
Trade payables A/c Dr 14000
To cash a/c Cr 14000
(Being cash paid against the inventory purchased)
Investments A/c (Short term) Dr 3000
To cash a/c Cr 3000
(Being investment made in short term)
Trial Balance as on the month end
Debit Amount in $ Credit Amount in $
Equipment 20000 Trade Payables 1000
Office Furniture 2700 Cash(Assume OD acount) 39300
Prepaid Insurance premium 2200 Accounts payable 2700
Purchases 15000
Office expenses 100
Investment 3000
43000 43000
d)
Particulars Amount in $
Purchases A/c Dr 45000
To Trade Payables A/c Cr 45000
(Being inventory purchased on credit)
Rent A/c Dr 6000
To cash A/c Cr 6000
(Being rent paid for the warehouse space)
Trade receivables A/c Dr 7500
To cost of goods sold A/c Cr 5000
To profit on sale A/c Cr 2500
(Being goods sold for a profit)
Office furniture A/c Dr 3000
To cash A/c Cr 3000
(Being office furniture purchased for cash )
Salaries A/c Dr 12000
To cash A/c Cr 12000
(Being salaries paid for the month)
Equipment A/c Dr 39000
To cash a/c Cr 39000
(Being manufacturing equipment purchased against cash)
Office expenses A/c Dr 700
To cash A/c Cr 700
(Being cash paid for cleaning)
Electricity and water charges A/c Dr 100
To cash A/c Cr 100
(Being utility bill paid )
Cash A/c Dr Dr 7500
To Trade receivables A/c Cr 7500
(Being cash received from customers)
Balance in cash account at the end of the month -53300

This balance cannot be negative. There might be an opening cash balance in the company at the beginning. This is the net outflow of cash.


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