In January 2021, Jawed Chaudhry opened a corporation to provide investment advisory services. The company is called CJ Associates. It began operations immediately. Transactions during the month of January were as follows:

 Jan. 1 The corporation issued 70,000 shares of capital stock to Jawed Chaudhry in exchange for Rs. 140,000 cash. Jan. 2 Purchased a building from Bahria Town for Rs. 220,000. Made a Rs. 40,000 cash down payment and issued a note payable for the remaining balance. Jan 4 Paid Careem Networks Rs. 250,000 to rent a car for the month. Jan. 15 Billed customers Rs. 832,000 for investment advisory services provided during the first half of January. Jan. 15 Paid Rs.588,000 in salaries earned by employees during the first half of January. Jan. 18 Paid Kamkaj.com R. 18,900 for maintenance and repair services of vehicle. Jan. 25 Collected Rs. 491,000 of the amounts billed to customers on January 15. Jan. 30 Billed customers Rs. 164,500 for advisory services provided during the second half of the month. Jan. 30 Paid Rs. 600,000 in salaries earned by employees during the second half of the month. Jan. 30 Received a Rs. 25,100 bill from PSO for fuel purchased in June. The entire amount is due February 10. Jan. 30 Declared a Rs.200,000 dividend payable on February 15.

Requirement

a. Analyze the effects that each of these transactions will have on the following six components of the company’s financial statements for the month of January. Organize your answer in tabular form, using the column headings shown. Use I for increase, D for decrease, and NE for no effect.

b. Prepare journal entries (including explanations) for each transaction.

c. Post each transaction to the appropriate ledger accounts

d. Prepare a trial balance dated June 30, 2011.

e. Using figures from the trial balance prepared in part d, compute total assets, total liabilities, and owners’ equity. Are these the figures that the company will report in its January 30 balance sheet? Explain your answer briefly.

Answer rating: 100% (QA)

a Analysis of Effects on Financial Statements Transaction Assets Liabilities Equity Revenue Expenses Dividends Jan 1 I 140 NE I 140 NE NE NE Jan 2 I 2... View the full answer