Question

Mohammed supplies you the following information for the month of January 2020.

Required:

1. Prepare journal entries for the transactions.
2. You are advised to post all these journals into appropriate ledger accounts.
3. Check the accuracy of your postings preparing a Trial Balance as of January 31, 2020.
4. Compare the differences between a Trial Balance, Balance Sheet and Statement of Shareholders’ Equity.

Transactions during the month of January 2020.

Jan 1    Capital invested AED 40000 in cash in business

Jan 2    Salary payment per month (already paid) to Manager, AED 2200

Jan 2    Paid office rent AED 5000

Jan 4    Purchase of goods from D Ltd AED 8000

Jan 10 Rent received AED 22200 in cash

Jan 12 Good sold AED 4200

Jan 22 Paid Accounts Payable due AED 4800

Jan 24 Drawings for personal use, AED 2000

Jan 30 Miscellaneous expenses paid AED 1500

Answer 1

A)

B)

C)D) Difference Between Trial Balance , Balance Sheet and Shareholders Equity.

Trial Balance

A trial balance is a bookkeeping worksheet in which the balance of all ledgers are compiled into debit and credit account column totals that are equal. The general purpose of producing a trial balance is to ensure the entries in a company's bookkeeping system are mathematically correct.

Balance Sheet

A balance sheet is a financial statement that reports a company's assets, liabilities and shareholders' equity at a specific point in time, and provides a basis for computing rates of return and evaluating its capital structure. It is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders.

What Is Shareholder Equity (SE)

Shareholder equity (SE), also referred to as shareholders' equity and stockholders' equity, is the corporation's owners' residual claim after debts have been paid. Equity is equal to a firm's total assets minus its total liabilities. Equity is found on a company's balance sheet.