Question

1. Shareholders invested £10,000 cash in the business in exchange for ordinary shares.

2. Purchased equipment for £5,000 cash.

3. Paid £400 cash for May office rent.

4. Paid £700 cash for supplies.     

5. Incurred £250 of advertising costs in the Beacon News on account.

6. Received £4,700 in cash from customers for repair service.

7. Declared and paid a £1,000 cash dividend.

8. Paid part-time employee salaries £1,000.

9. Paid utility bills £160.

10. Performed repair service worth £980 on account.

11. Collected cash of £120 for services billed in transaction (10). Instructions

Prepare a tabular analysis of the transactions, using the following column headings: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Share Capital, and Retained Earnings (with separate columns for Revenues, Expenses, and Dividends). Include margin explanations for any changes in Retained Earnings. Revenue is called Service Revenue.

Answer 1

Read this point to point entry wise.

						( Amount in £)
Particulars	Assets	Liabilities
Cash	Accounts receivbles	Supplies	Equipments	Accounts Payable	Share capital	Retained earning
1. Shareholders invested	10,000					10,000
2. Purchased equipments	-5,000			5,000
3. Office rent paid	-400
4. paid cash for supplies	-700		700
5. Advertising cost					250
6. Received cash from customer	4,700
7. Declared and paid cash dividend	-1,000
8.Paid part time salaries	-1,000
9. Paid utility bills	-160
10. Performed repair service		980
11. Received cash for services in 10	120	-120
12. Transfer from Profit & Loss accounting ( see working below)							2,870
TOTAL	6,560	860	700	5,000	250	10,000	2,870

Working of point 12

Expenses are represented with negative sign

Particulars	Profit & Loss
Revenue	Expenses	Profit = Revenue -Expenses	Dividend	Retained earning= Profit- Dividend
1. Shareholders invested
2. Purchased equipments
3. Office rent paid		-400
4. paid cash for supplies
5. Advertising cost		-250
6. Received cash from customer	4700
7. Declared and paid cash dividend				-1000
8.Paid part time salaries		-1000
9. Paid utility bills		-160
10. Performed repair service	980
11. Received cash for services in 10
TOTAL	5680	-1810	3870	-1000	2870

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