Question

Use the Following information for the Question Numbers 5 to 10.
Mr. Salah opened the accounting analyst services in January 2020. He
plans to prepare the monthly financial statement dated 31 January 2020.
During this month period he completed the following transaction.
January 1. Mr. Salah invested cash OMR 30,000, computer value OMR
2,000
January 2. Paid OMR 1500 cash for the rent of office space for the next 3
months.
January 3. Purchased other office tools OMR 950 on credit.
January 4. Hired a helper agree salary OMR 700.
January 8. Completed work for a client and immediately collected cash
OMR 2,80
January 10. Perform services for a client and sent a bill OMR 500 to be
paid later.
January 12. Purchased supplies OMR 8,000 in cash.
January 14. Mr. Salah has booked an equipment for OMR 999 and the
expected delivery of an equipment will be in the month of February.
January 15. Received cash OMR 3000 from a client for the service to be
provided for the month of February and March 2020.
January 17. Pay school fees OMR 450 for the kids from his personal fund.
January 18. Collected OMR 200 on the amount owed by the client.
January 22. Purchased laptop and returned it back on the same day as it
was defective OMR 299
January 25. Paid cash OMR 500 for liability on the office tools
January 28. Owner withdrew OMR. 500 cash for personal use.
January 30. Completed work for another client OMR. 600 but paid only
for 50% of the amount. The remaining agree to pay later.
January 31. Paid salary of helper. OMR 700.
January 3 1. Planned to purchase additional supplies of OMR 500.
January 31. Received electricity bill OMR 250.
From the above transaction you are required to prepare:
5. Analyze the transaction by using accounting equation. (0.5
6. Prepare the Journal entries for the month of January. (0.25 for
7. Post the entries and calculate the balances. (0.5 Mark*13 = 6.5
Mark*8 marks)

Answer 1

5. Accounting Equation:

Date	Assets	=	Liabilities	+	Capital	Revenue	-	Expenses	=	Profit
Jan1	30,000
	2,000	=			32,000
Jan2	1,500
	(1,500)
Jan3	950	=	950
Jan4
Jan8	2,800	=			2,800	2,800	-	0	=	2,800
Jan10	500	=			500	500	-	0	=	500
Jan12	8,000
	(8,000)
Jan14
Jan15	3,000	=	3,000
Jan17
Jan18	200
	(200)
Jan22
Jan25	(500)	=	(500)
Jan28	(500)	=			(500)
Jan30	300
	300	=			600	600	-	0	=	600
Jan31	(700)	=			(700)	0	-	700	=	(700)
Jan31
Jan31			250	-	250	0	-	250	=	(250)

6. Journal Entries:

Date	Description	Debit	Credit
Jan 1	Cash	30,000
	Computer	2,000
	Capital		32,000
Jan 2	Prepaid Rent	1,500
	Cash		1,500
Jan 3	Office Tools	950
	Accounts Payable		950
Jan 4	No Entry
Jan 8	Cash	2,800
	Revenue		2,800
Jan 10	Accounts Receivable	500
	Revenue		500
Jan 12	Supplies	8,000
	Cash		8,000
Jan 14	No Entry
Jan 15	Cash	3,000
	Unearned Revenue		3,000
Jan 17	No Entry
Jan 18	Cash	200
	Accounts Receivable		200
Jan 22	No Entry
Jan 25	Accounts Payable	500
	Cash		500
Jan 28	Drawings	500
	Cash		500
Jan 30	Cash (600*50%)	300
	Accounts Receivable (600-300)	300
	Revenue		600
Jan 31	Salary Expense	700
	Cash		700
Jan 31	No Entry
Jan 31	Utility Expenses	250
	Accounts Payable		250

Note:

No Journal Entries required for the following transaction:

Date	Reason
Jan 4	Helper has been hired and salary has been agreed. But it is not due since the helper has not commenced work yet and there is no liability to pay until and unless the helper performs the services.
Jan 17	Only the transactions which affect the business accounts are recorded. In the given transaction, the personal expenses of the owner is taken care of from his personal funds. Hence, no journal entry will be passed in the books.
Jan 22	The laptop has been purchased and returned on the same day. Hence, the net effect of the transaction does not affect any account. Alternatively, a journal entry for the purchase and a reversal entry for the return may be passed.
Jan 31	There is only a plan to purchase additional supplies but supplies have not yet been purchased. So, no journal entry is required for planning for future transactions.

7. Ledger Accounts:

Date	Account	Debit	Credit	Balance
Cash
Jan 1	Capital	30,000
Jan 2	Prepaid Rent		1,500
Jan 8	Revenue	2,800
Jan 12	Supplies		8,000
Jan 15	Unearned Revenue	3,000
Jan 18	Accounts Receivable	200
Jan 25	Accounts Payable		500
Jan 28	Drawings		500
Jan 30	Revenue	300
Jan 31	Salary Expense		700	25,100
Computer
Jan 1	Capital	2,000		2,000
Prepaid Rent
Jan 2	Cash		1,500	1,500
Office Tools
Jan 3	Accounts Payable	950		950
Revenue
Jan 8	Cash		2,800
Jan 10	Accounts Receivable		500
Jan 30	Cash		300
Jan 30	Accounts Receivable		300	3,900
Accounts Payable
Jan 3	Office Tools		950
Jan 25	Cash	500
Jan 31	Utility Expenses		250	700
Accounts Receivable
Jan 10	Revenue	500
Jan 18	Cash		200
Jan 30	Revenue	300		600
Supplies
Jan 12	Cash	8,000		8,000
Unearned Revenue
Jan 15	Cash		3,000	3,000
Capital
Jan 1	Cash		30,000
Jan 1	Computer		2,000	32,000
Drawings
Jan 28	Cash	500		500
Salary Expense
Jan 31	Cash	700		700
Utility Expense
Jan 31	Accounts Payable	250		250