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