In: Accounting
Case 1:
The following information relates to Chater’s Advertising Services for the accounting period ending December 31, 2018. The company is a leader within your local advertising industry but their accountant resigned just days before the final year end and only the information now presented was made available. The owners have decided to test your groups’ knowledge in accounting having been made aware that you are currently pursuing a course in accounting at the university level. In this regard your group has been approached to use the information presented alongside your knowledge to advise and present the company financial statements for the period.
Charter’s Advertising Service
Trial Balance
December 18, 2018
Account Name |
DR |
CR |
|
25,500 |
|||
Cash |
3,100 |
||
Accounts Receivable |
2,300 |
||
Supplies |
2,600 |
||
Equipment |
|||
Accumulated Depreciation - Equipment |
|||
Furniture |
6,000 |
||
Accumulated Depreciation - Furniture |
|||
Accounts Payable |
4,000 |
||
Salary Payable |
|||
Unearned Service Revenue |
|||
Charter’s Capital |
40,000 |
||
Charter’s Withdrawal |
|||
Service Revenue |
4,200 |
||
Rent Expense |
3,600 |
||
Utilities Expense4 |
1,700 |
||
Salaries Expense |
3,400 |
||
Depreciation Expense - Equipment |
|||
Depreciation Expense - Furniture |
|||
Supplies Expense |
|||
Total |
48,200 |
48,200 |
|
Later in December, the business completed these transactions, as follows:
Dec. 21 Received $2,500 in advance for advertising service expected to be performed in January 2019.
Dec 21 Paid secretary $500 for the week December 17 to 21.
Dec. 26 Paid $1,000 on account.
Dec 28 Collected $1,200 on account.
Dec 30 Charter withdrew cash of $2,000 for personal use.
Requirements
dec 21 serice revenue a/c ..............dr 2500
to Customer a/c 2500
( being cash recived for advertisement in advance)
dec 21 secretary a/c..................dr 500
to cash a/c 500
(being cash paid to secretary)
dec 26 accounts payable a/c...........dr 1000
to cash a/c 1000
(being cash paid on account)
dec 28 Cash A/c .....................dr 1200
to Accounts receivable 1200
(being cash received on account)
dec 30 Drawings a/c ....................dr 2000
to cash a/c 2000
(being cash withdrawn for personal use)
a, Accounts Receivable a/c .................dr 600
to Servce revence a/c 600
(being accounts recivable recived)
b. customer a/c ............................dr 700
to service revenue 700
(being revenue earned from advance recieved)
c. supplies A/c .....................dr 1300
to cash 1300
(being supplies on hand)
d. Depreciation a/c............................dr 860
to cash 860
(being depreciation charged for equipments and furniture)
e. salary a/c....................................dr 500
to accounts payable 500
(being salary payable accrued)
Charter’s Advertising Service
Income and Expenditure statement as on 31.12.2018
Expenditure Amount Income Amount
rent 3600 service revenue 4900
utiities expense 1700
supplies 3600 excess of expenditure
salary 3900 over income 8760
depreciation 860
total 13660 total 13660
Charter’s Advertising Service
Balance sheet As At 31.12.2018
Liablities amount Asset Amount
capital 40000 furniture (6000-6000) 5400
less: excess of equipment(2600-260) 2340
expendiure 8760 accounts receivable 3100
less: drawings 2000 29240 less: received 1200 1900
accounts payable 4000 service revenue receivable 600
less paid: 1000 3000 cash 22500
Salary Accrued 500 .
32740 32740