a) Mr X has graduated with a Master of Accounting and Financial Planning. Now after a few years’ experience in practice, feeling more confident about operating a business. He has decided to establish his own tax and accounting consultancy firm. His clients will include local businesses and individuals. His first month of transactions trading as X Accounting are provided below. 

Record the following events into the transaction analysis chart or indicating if the event is not an accounting event

March 2021

1. Invested $250,000 of his own funds into a business bank account.
2. X contributed his own computer equipment valued at $12,000, to the business.
3. Purchased a small office in Burwood for $620,000. Sam paid a 10% deposit, and the balance was financed through a mortgage with Eastpac Bank.
4. X purchased Office equipment for $10,000 cash.
5. Hired an office assistant on a casual basis.
6. Paid $3,600 for building and contents insurance for 12 months. Office stationery was purchased for $800 on 10-day credit terms. Office furniture was purchased for $4,000 cash.
7. X acquired a motor vehicle for $35,000 on 120 days credit terms. No payments are required until July 2021.

11. The Office stationery account of the 6th was paid.

12 X invoiced his first client, City BMW, $3,000 for 15 hours consulting.

16 Invoiced clients $3,500 for consulting services performed.

17 Received full payment from City BMW.

18 Paid wages to the office assistant totalling $1,400, $300 of which was deducted for PAYG tax which will be remitted to the Australian Taxation Office at a later date.

25 Invoiced clients for $4,800 for consultation services.

28 Paid a mortgage repayment of $2,800, of which $1,200 is interest and $1,600 is principal.

28 X withdrew $2,000 for personal use.

Additional information at the end of the month:

• Admin expenses owing at balance date are $480.

• Motor vehicle is depreciated at 20% per annum straight line, residual value $5,000.

• Computer equipment is depreciated at 40% per annum reducing balance, zero residual value.

• Equipment is depreciated at 20% per annum straight line, residual value $1,000.

• Office Furniture is depreciated at 10% per annum straight line, zero residual value.

• Accounts for one month of Insurance expense, the policy was purchased on the 6th.

• Assume a full month for depreciation for all assets (no depreciation for the office building).

• All the office stationery remained unused at balance day.

• Round to nearest dollar.

• Ignore GST and income tax.

in the below format-

Date:

Assets ↑Increase, ↓Decrease

Liabilities ↑Increase, ↓Decrease

Owner’s equity ↑Increase, ↓Decrease

b) and Prepare classified Income Statement and Balance Sheet for the month ending 31 March 2021 for the above X- Accounting firm.

Answer rating: 100% (QA)

a 1 Invested 250000 of his own funds into a business bank account accounting event 2 X contributed h... View the full answer