QUESTION 1
Step by step explanation
Given
Debit cash settlements (credit) = Br 8300
Debit materials = 2000
Debit office equipment = 1000
Debit settlements (credit authorized capital) – 20,300
Debit – current short term loans – 5000
Payments to suppliers – 1800
Office equipment – 3600
Payments to suppliers – 200
Other income and expenses – 200
Payments to staff – 1200
Settlements with personal customers – 6000
Office equipment – 2000
Settlement with founder – 5000
Short term loans – 1100
Debit material – 800
Payment to suppliers – 400
Debit – Credit customers – 4400
Debit material – 1800
Productions – 2460
March 1 March 31 Cash Fixed assets
Fixed assets 10000 121400 Debit Cash Debit Cash
Materials 2000 2800 8300 10000
Cash, current account 8300 17800 4400 1800 3600
Accounts receivable 0 1800 5000 200
Total asset 20,300 34,540 4200 2000 800
Authorized capital 20,300 25,300
Retained earnings, loss 0 -60 Authorized capital Materials
Short term loans 0 3900 Debit Credit Debit Credit
Accounts payable 0 5400 20,300 2000
Total liabilities 20,300 34.540 5000 800
Cash register Settlement with founders Current account
6060 6000 20,300 20,300 5000
60 5000 5000 1800
200
1100
100
500
3600
Main Production Settlement With Customers Depreciation Payment To Suppliers
Debit Credit Debit Credit Debit Credit Debit Credit
1200 200 200 1800
1200 4400 200 3600
1200 6000 2000
4200 100
2460 6200 8600 500
6000 2400 2600 5600
Journal Entries
Date Account Title Debit Credit
March 1. Cash Br, 8,300
Supplies Br, 2,000
Office Equipment Br, 10,000
Tahir Muktar, Capital Br, 20,300
March 2, Cash Br 5,000
Long term bank loan Br, 5,000
March 2 Prepaid Rent Br, 1,800
Cash Br, 1,800
March 3, Welding and repair machinery Br, 3,600
Cash Br, 3,600
March 4 Miscellaneous expense Br, 200
Cash Br, 200
March 8 Cash Br, 200
Office equipment Br, 200
March 13 Salary expense Br, 1,200
Cash Br, 1,200
March 16 Cash Br, 4,400
Fees Earned Br, 4,400
March 20 Salary expense Br, 1,200
Cash Br, 1,200
March 20 Cash Br, 500
Accounts receivable Br, 500
March 20 Accounts Receivable Br, 6,000
Fees Earned Br, 6,000
March 21 Repair machinery Br, 2,000
Accounts payable Br, 2,000
March 23 Cash Br, 5,000
Tahir Capital Br, 5,000
March 24 Long term Bank loan Br, 1,000
Interest expense Br, 100
Cash Br, 1,100
March 26, Supplies Br, 800
Cash Br, 800
March 27 Customer entertainment (Miscellaneous expenses) Br, 100
Cash Br, 100
27 Salary Expense Br, 1,200
Cash Br, 1,200
March 31, Electricity charge (Miscellaneous Expense) Br, 500
Cash Br, 500
March 31, Cash Br, 4,200
Accounts Receivable Br, 4,200
March 31, Tahir, Drawings Br, 1, 800
Cash Br, 1,800
Total 60,600 60,600
Universal Garage Post Adjusting Entries
Mar Accounting title and explanation Debit Credit
i The amount paid on Mar 3 for a three month rent
Supplies expense 1,900
Supplies 1,900
ii The amount paid on Mar 3 is for a three month rent
No entry. This is the analysis stating that the monthly rental is 600
iii The amount of depreciation for machinery and office equipment are
Depreciation expense-Machinery 560
Accumulated Depreciation-Machinery 560
Depreciation Expense – Office Equipment 1,900
Accumulated Depreciation-Office equipment 1,900
Iv Universal Garage usually pays Br, 1,200 for employee’s salary every
Saturday
No entry. This is the analysis stating that the payout is every Saturday
v Interest on bank loan accrued but not paid on march 31 total Br, 100
Cash 200
Accrued Expense 200
Universal Garage
Name of accounts Unadjusted Post-Adjusting Post-Closing
Trial Balance Entries Trial Balance
Debit Credit Debit Credit Debit Credit
100 ASSETS
110 CURRENT ASSETS
111 Cash 27,100 11,100 200 16,20
0
112 Account receivable 6,000 4,200 1,800
114 Supplies 2,800 1,900 900
116 prepaid rent
117 prepaid insurance
120 PLANT ASSETS
121 land
123 machinery 5,600 5,600
123-1Accumulated Depreciation- 569
Machinery
125 Office equipment 10,000 200 9,800
125-1Accumulated depreciation- 1,900 1,900
Office equipment
200 LIABILITIES
210 CURRENT LIABILITY
211 Account payable 2,000 2,000
213 Salaries payable
216 interest payable
Accrued expense 200 200
220 NON CURRENT LIABILITES
221 long term bank loan 1,000 5,000 4,000
300 OWNERS EQUITY
301 Tahir Capital 25,300 25,300
302 Tahir Drawings 1,800 1,800
303 Income Summary
400 REVENUES
401 Fees Earned 10,400 10,400
410 Other Income 1,200 1,200
500 EXPENSES
501 Salary Expenses 2,400 2,400
502 Supplies Expenses 1,900 1.900
503 Rent Expenses 1,800 1,800
505 Depreciation Expenses 2,460 2,460
506 Interest Expenses 100 100
510 Miscellaneous Expenses 800 800
Universal Garage
Balance Sheet as of March 31, 2002
100 ASSETS
110 CURRENT ASSETS
111 Cash 16,200
112 Account receivable 1,800
114 Supplies 900
116 prepaid rent
117 prepaid insurance
120 PLANT ASSETS
121 land
123 machinery 5,600
123-1 accumulated depreciation-machinery (560)
125 Office equipment 9,800
125-1 accumulated depreciation-Office equipment (1,900)
Total Asset 31,840
200 LIABILITIES
210 CURRENT LIABILITY
211 Account payable 2,000
213 Salaries payable
216 interest payable
Accrued expense 200
220 NON CURRENT LIABILITES
221 long term bank loan 4,000
Total Liability 6,200
300 OWNERS EQUITY
301 Tahir Capital 25,300
302 Tahir Drawings (1,800)
303 Income Summary 2,140
Total Equity 25,640
Total Liability and Equity 31,840
Universal Garage
Income statement
400 REVENUES
401 Fees Earned 10,400
410 Other Income 1,200
Total Revenue 11,600
500 EXPENSES
501 Salary Expenses 2,400
502 Supplies Expenses 1,900
503 Rent Expenses 1,800
505 Depreciation Expenses -
506 Interest Expenses 100
510 Miscellaneous Expenses 800
Total Expenses 9,460
Net Income 2,140
QUESTION 2
STEP BY STEP EXPLANATION
Ale Hab Consultancy Service
Income Statement
Service income $ 35,000
Advertising Expense $ 6,000
Rent Expens $ 4,500
Utilities Expense $ 1,200
Interest Expense $ 50
Other Expense $ 800
Supplies Expense $ 700
Total Income $ 18,750
Ale Hab Consultancy Service
ASSETS
Cash 38,050
Accounts Receivable 10,000
Furniture and Fixtures 25,000
Office Supplies 1,300
Automobile 8,000
LIABILITES
Loan Payable $ 3,600
EQUITY
Alemu Capital 90,450
Alemu Hab Consultancy Service
1 Cash $20,000
Capital $20,000
2, Furniture and Fixtures $30,000
Capital $30,000
3 Office Supplies $2,000
Accounts payable $2,000
4 Cash $20,000
Service income $20,000
5 Advertising Expense $3,000
Cash $3,000
6 No entry
7 Cash $10,000
Alemu, Capital $10,000
8 Accounts Receivable $15,000
Service income $15,000
9 Cash $5,000
Furniture and Fixtures $5,000
10 Cash $5,000
Accounts Receivable $5,000
11 Accounts Payable $2,000
Cash $2,000
12 Automobile $8,000
Cash $8,400
13 Cash $4,000
Loans Payable $4,000
14 No entry
Alemu merely employed an accountant and secretary, no actual
transaction occurred
15-19 Wages Expense $6,000
Rent Expense $4,500
Utilities Expense 1,200
Other Expense 800
Cash 12,500
20 Supplies Expense $700
Supplies $700
21 Loans Payable $400
Interest Expense $50
Cash $450
22 No Entry
All personal expenses should not be recorded
