Name of the Company Balance Sheet At the Start of Year 2019 Liabilities and Capital Rs.
Question:
Name of the Company
Balance Sheet
At the Start of Year 2019
“
Liabilities and Capital | Rs. |
Equity | 1,000,000 |
Retained Earnings | 800,000 |
Long Term Loan | 750,000 |
Bonds Payable (11% per year) | 600,000 |
Lease Payable | 500,000 |
Accounts Payable | 200,000 |
Accrued Expenses | 80,000 |
Notes Payable | 120,000 |
Total | 4,050,000 |
Assets | |
Land | 300,000 |
Building | 900,000 |
Acc. Dep. Building | -250,000 |
Plant and Machinery | 1,150,000 |
Acc. Dep. Plant and Machinery | -270,000 |
Office Equipment | 1,000,000 |
Acc. Dep. Office Equipment | -230,000 |
Furniture and Fixtures | 390,000 |
Acc. Dep. Furniture and Fixtures | -180,000 |
Vehicles | 680,000 |
Acc. Dep. Vehicles | -140,000 |
Stock in Trade | 190,000 |
Accounts Receivable | 130,000 |
Prepaid Expenses (12 months) | 120,000 |
Cash | 80,000 |
Bank | 180,000 |
Total | 4,050,000 |
Transactions in the year 2019.
January
- Sold a car for Rs. 550000 cash.
- Deposited Rs. 170000 of the proceeds from the sale of car in a bank account opened in the name of the business.
- Purchased for Rs. 800000 a small building to be used as an office. Paid Rs. 300000 cash and signed a note payable promising to pay the balance over a period of years.
- Purchased office equipment from the market Rs. 55000
- Took office equipment from home for use in the business. The equipment had a Rs. 35000fair value.
- Purchased office supplies for cash, Rs. 10000
- Purchased office furniture on credit, on four equal installments Rs. 60000
- Purchased goods from Alpha Suppliers Rs. 440000.
- Sold goods on Credit to Zampa Corporation Rs. 170000.
- Paid a local newspaper Rs. 17000 for a notice of the opening.
- Sold a part of the building and collected a Rs.580000 cash.
- Made a Rs.17500 installment payment on the furniture purchased in transaction ‘7’.
- Paid to Alpha Suppliers the amount owed to them as given in transaction “8”.
- Paid the office salary Rs. 32000.
- The owner withdrew Rs.52000 from the bank account of the business to pay personal living expenses.
- Rented a furnished office and equipment of paying Rs.19000cash as the next six months’ rent.
- Purchased office supplies for cash Rs.7000.
- Paid Rs. 5000 for janitorial expense of the month.
- Sold goods for cash Rs.75000 .
- Sold goods for Cash Rs. 25000 and on Credit to Yum Yum Rs. 78000.
- Received half payment from Zampa Corporations.
- Paid for subscription expense of magazine for the business Rs.43000. This will cover 60 issues of the magazine.
- Paid the telephone bill for the month Rs. 8000.
- Paid the utilities expense Rs. 9500.
- Purchased insurance protection for the next 12 months i.e. February 2019 to January 2020, by paying Rs. 6800 premium.
- Owner withdrew Rs. 19000 from the business for his personal use.
- Transferred Rs. 15000 from his personal savings account to a checking account opened in the name of the business.
- Purchased office supplies for cash, Rs. 16000.
- Paid for legal fee of the lawyer for a law suit in the court Rs. 29000.
- Purchased office equipment on credit for DGG Manufacturers Rs.30000.
- Recorded government duties of Rs. 23000. These will be paid at the end of March 2019.
February
- Deposited Rs. 50000 in the bank account.
- Purchased office supplies on credit from Suppliers and Providers Inc.Rs. 31000.
- Paid for the office equipment purchased on 30th January.
- Withdrew Rs. 17000from the bank account.
- Earned Rs. 1900 Interest Income on the amount in the bank account.
- Paid the office salary, Rs.26000.
- Paid the monthly utility bills, Rs.5000.
- Sold good on credit to BBC Corp. Rs. 75000.
- Paid a part of the Long-Term Liabilities
- Goods of Rs. 230000 purchased earlier and the payable amount was adjusted, Alpha Suppliers.
- Paid travelling expense for the business trip Rs. 36000.
- Paid one tenth of the leased amount Rs. 58000.
- Some of the fixtures were sold for Rs. 65000. A loss of Rs. 22,000 was sustained on the sale of the furniture.
- Paid one fourth of the accrued expenses
- A note payable of Rs. 190000. was retired.
- Paid utilities expenses for the month.
- Made cash purchases of goods Rs. 300000.
- Made credit purchases from the supplier Rs. 210000.
- Paid to the supplier from whom the good were purchased on 18th February getting a discount of 5%.
- Sold goods for Cash Rs. 540000.
- Paid repair and maintenance expenses Rs. 6000.
- Paid advance salary to one of the employees Rs. 22000.
- Paid rent of one of the building Rs. 7000.
- Received cash from the account’s receivables. Rs.60000 .
- Goods of Rs. 45000. were returned by the customers.
- Took a loan from HBL Rs. 850000.
- Paid interest expense Rs. .
- Recorded rent expense Rs. 1900.
March
- The owner invested Rs. 900000in the business for expansion.
- A new equipment was leased for the business Rs. 60000.
- Rs. 65000of the loan taken were returned.
- Paid salary for the month Rs.38000.
- Paid utilities expense for the month Rs.6800.
- Recorded health insurance paid in cash Rs.30000 .
- Purchased goods for cash Rs.250000.
- Sold goods on credit Rs. 180000.
- Purchased goods on credit Rs. 190000.
- Paid to suppliers Rs. 0000 receiving a discount of Rs. 00’
- Paid to an advertising company for the advertisement of next 20 ads Rs. 6500.
- Paid Sales tax Rs. 4500.
- Goods of Rs. 1000 were stolen from the store.
- Deposited Rs. 55000 in the bank account.
- Paid a part of the leased amount Rs. 300000
- Paid the installment of the long-term loan Rs. 50000.
- The bank sent a debit advice of Rs. 4000 for bank charges.
- Amount payable to supplier was paid Rs. 400000.
- Sold good for cash Rs. 60000.
- Sold good on credit Rs. 90000.
- Purchased goods of Rs. 400000 getting a discount of Rs. 50000.
- Sold goods of Rs. 40000 giving a discount of Rs. 8000.
- Paid plumbing charges for the repair work of the office Rs. 6000.
- Received electricity bill of Rs. 7000.
- Received an overdraft amount of Rs. 25000 from Allied Bank.
- Received from the employee Rs. 15000 against the advance salary paid to him.
- Paid interest on Bonds Payable for the quarter Rs. 180000.
- Received advance of Rs. 166000 on the goods to be sold in the future.
- Rs. 55000 goods were returned by a supplier who purchased goods on credit.
- Office supplies were purchased for cash Rs. 60000.
- Rent expense of the month was recorded Rs. 7000.
Adjustments:
- Rs. 5000 utilities expenses were outstanding at the end of the quarter.
- Rs. 3000 interest expense are payable at the end of the quarter.
- Goods of Rs. 16000 were sent against the advance received on 28th March 2019.
- Office Supplies of Rs. 4000 were on hand on 31st March 2019.
- Ending inventory (stock in trade) was Rs. 45000
- Prepaid expenses are adjusted accordingly.
- Depreciation on Building was recorded @ 10% on the cost.
- Depreciation on Plant and Machinery was recorded @ 10% on the book value
- Depreciation on Office Equipment recorded @ 5% per year on the book value
- Furniture and Fixtures’ depreciation of Rs. 18000 was recorded.
- Vehicles are depreciated using sum of years’ digit method with 10 years life and this is the third year.
- 12 magazines were received by the end of the quarter out of 60, for which subscription was paid
- 8 out of 20 ads were given by the advertising agency against the amount deposited in advance.
- Income tax rate is 30% on the amount of Profit before Tax.
- All of the amount of profit after tax was transferred to the Retained Earnings account.
Required:
- Pass journal entries in a proper format with amount of your own.
- Make ledger accounts for all the accounts appearing in the opening balance sheet and the accounts which are to be created because of the journal entries in the first quarter.
- Make an Unadjusted Trial Balance using the balances in the opening balance sheet and the ledger accounts.
- Pass the adjusting entries
- Make and Adjusted Trial Balance
- Make a Profit and Loss Account for the first quarter from January 2019 to March 2019.
- Calculate Income Tax
- Transfer the Net Profit after Tax to the Retained Earnings Account
- Make a Balance Sheet at the end of first quarter.
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen