Question

Mr. Ali the owner of a business in Muscat; incorporates as Software Programming Company that specialises in providing computer programming services and selling computer devices and accessories. The business has been established on 1st July 2019 without having specialized accounting department or system. However, at the end of July the business faces major difficulties and misunderstanding of the process of recording and journalizing the relevant economic transactions that have been done during the first month in an appropriate and standardized way. In this case you are required to handle some financial problems that Mr. Ali has provided you with the following transactions:

July 1. Mr. Ali The owner invests OMR 110,000 cash in the business.

July 2. The business purchased office equipment for OMR 45,000 cash. With annual depreciation of 10% for the next 10 years with no expected salvage value.

July 3. The business purchased for OMR 3,600 on account from a Supply Company computer paper and other supplies expected to last for several months.

July 5. The business provided OMR 14,000 of programming and maintenance services for a customer. It received cash of OMR 7,000, and it billed the balance of OMR 7,000 on account.

July 7. The business purchased computer accessories as an inventory in order to resell them. The business purchased 1000 headsets for OMR 10 each.

July 10. The business paid OMR 4,000 from the purchases due balance for the supplier.

July 15. The baseness purchased supplies OMR 8,000 in cash.

July 20. The business sold 550 units for customers for OMR 20 each.

July 23. The business received OMR 5,500 of the sales due balance from the customers.

July 27. Mr. Ali withdrawn OMR 1,600 cash from the business for his personal use.

July 28. The business hired a new secretary with basic salary of OMR 650.

July 29. The business received OMR 4,500 for programming services that will provide during the next 3 months.

July 30. The business paid the following expenses in cash for July: Store rent OMR 1,000, salaries and wages of employees OMR 3,400.

July 31. The business purchased a 6-month insurance policy for OMR 1,800

July 31. Received and paid the electricity and other utilities bills of OMR 1,100.

From the above transaction you are required to prepare:

10. Use the adjusted Trial Balance to prepare Income statement, statement of owners’ equity and statement of financial Position.

Answer 1

Answer 10

In the books of Mr. Ali

     Trial Balance

                                                    For the year ended 31 July 2019

Particulars	Dr (OMR)	CR (OMR)
Cash	72,100
Capital		110,000
Office Equipment	44,625
Depreciation	375
Drawings	1,600
Supplies	11,600
Accounts Payable		9,600
Accounts Receivable	1,500
Service Revenue		14,000
Goods Revenue		11,000
Purchases	10,000
Unearned Revenue		4,500
Store Rent	1,000
Salaries and Wages	3,400
Prepaid Insurance	1,800
Electricity and other utilities	1,100
Total	149,100	149,100

                                                                 

Income statement

                                                  For the year ended 31 July 2019

Particulars	Amount (OMR)	Amount (OMR)
Goods Revenue		11,000
Service Revenue		14,000
Total Revenue		25,000
Expenses
Purchases	10,000
Store Rent	1,000
Salaries and Wages	3,400
Electricity and other utilities	1,100
Depreciation	375
Total Expenses		15,875
Profit for the year		9,125

                                                                 

Statement of owners’ equity                                 

        For the year ended 31 July 2019

Particulars	Amount (OMR)
Capital Introduced	110,000
Less: Drawings	1,600
	108,400
Add: Profit for the year	9,125
Owner’s Capital	117,525

                                                Statement of financial Position

                                            For the year ended 31 July 2019

Particulars	Amount (OMR)
ASSETS
Office Equipment	44,625
Supplies	11,600
Accounts Receivable	1,500
Prepaid Insurance	1,800
Cash	72,100
Total Assets	131,625
CAPITAL AND LIABITIES
Capital	117,525
Liabilities
Accounts Payable	9,600
Unearned Revenue	4,500
Total Capital and Liabilities	131,625