Assignment 1st | Financial Accounting

Read Instructions Before Start an Assignment:

Assignment Have divided into 3 Part and compulsory to attempt all parts.
It has covered the Week 1 to week 3 Learning Concepts.
(Part 1st)

Compulsory to attempt it:

Which of the following is the normal way to present the accounting equation? (Mark the
correct answer with “C”)
a. Liabilities = Assets – Owners’ equity
b. Assets – Liabilities = Owners’ equity
c. Assets = Liabilities + Owners’ equity
d. Assets – Liabilities – Owners’ equity = 0

1) Solve Accounting Equation

Fill in the missing information below and write down the analysis (i.e., Explain the application of
accounting equation)

Assets Liabilities Shareholders’ Equity

Business #1 $31,000 $181,000 212,000
Business #1 $74,800 $38,600 36200
Business #1 $30,000 $21,400 51,400
Business #1 $25,000 $33,800 (8,800)*
* Business #4’s equity is in an accumulated deficit position.
Analysis: Assets = Liabilities + Shareholders' Equity

Fill in the missing information below and write down the analysis (i.e., Explain the application of
accounting equation)
Assets Liabilities Shareholders’ Equity
Business #1 100,000 80,000 60,000
Business #2 1,250,000 150,000 1,100,000
Business #3 75,000 48,500 26500
Business #4 52,000 59600 (7,600) *

Business #4’s equity is in an accumulated deficit position.

Analysis:
highlights the relationship between assets, liabilities, and shareholders' equity, providing insights into the
 Assignment 1st | Financial Accounting

sources of funding and the overall solvency of the business.tween assets, liabilities, and shareholders'
equity, providing insights into the sources of funding and the overall solvency of the business.

2 A business has $250,000 total liabilities. At start-up, the owners invested $500,000 in the
business. Unfortunately, the business has suffered a cumulative loss of $200,000 up to the
present time. What is the amount of its total assets at the present time?
Solve It: Total Liabilities = $250,000
Owner's Equity = Initial investment - Cumulative loss
Initial investment = $500,000
Cumulative loss = $200,000

Owner's Equity = $500,000 - $200,000

Owner's Equity = $300,000

Now calculate the total assets:

Total Assets = $250,000 + $300,000

Total Assets = $550,000

3 A business has $485,000 total liabilities and $1,200,000 total owners’ equity. What is the amount of
its total assets?
Solve It: Total Assets = Total Liabilities + Owner's Equity

Given:
Total Liabilities = $485,000
Owner's Equity = $1,200,000

Now put values into the equation:

Total Assets = $485,000 + $1,200,000

Total Assets = $1,685,000

4 A business has $175,000 total liabilities. At start-up, the owners invested $250,000 capital. The
 Assignment 1st | Financial Accounting

business has earned $190,000 cumulative profit since its creation, all of which has been retained
in the business. What is the total amount of its assets?

Solve It: Total liabilities = $175,000

Capital investment = $250,000

Cumulative profit = $190,000 (retained earnings

Owner's Equity = Capital Investment + Cumulative Profit

Owner's Equity = $250,000 + $190,000

Owner's Equity = $440,000

total amount of assets:

Assets = Liabilities + Owner's Equity

Assets = $175,000 + $440,000

Assets = $615,000

Therefore, the total amount of assets for the business is $615,000.

 Assignment 1st | Financial Accounting

(Part 2nd)
Account Classification:
Each of the following accounts is either an Asset (A), Liability (L), Shareholders’ Equity (SE),
Revenue (Rev), Expense (Exp)
Mark the first blank with the appropriate classification – A, L, SE, Rev, Exp
If you have identified an item as either an Asset or Liability, mark the
second blank as “C” if the item is current.

A/L/SE C (Mention only Current

Assets/Current Liabilities)
Long-term investments A
Accounts receivable A C( Current Asset)
Consulting revenue Rev
Rent revenue Rev
Computer A C(Current Asset)
Mortgage payable L
Salaries L C(Current
payable liability)
Cash A C(Current Asset)
Equipment A
Retained earnings SE
Temporary A C(Current Asset)
investments
Accounts payable L C(Current
liability)
 Assignment 1st | Financial Accounting

Income tax expense Exp

Car A
Salaries expense Exp
Utilities expense Exp
Land A
Inventory A C(Current Asset)
Building A
Interest expense Exp
Bank loan payable L
Common shares Se
Telephone expense Exp
 Assignment 1st | Financial Accounting

(Part -3rd)

Transactions
Prepare the general journal entries to record the following transactions for the business
for the month of May 2022:
May
1 Owner deposited $50,000 of his own money into the business’ bank account.
3 Employed a part-time worker to begin work on the first Monday of next month,
earning a salary of $450 per week.
5 Purchased office supplies for $80 and a laptop for $2,500, both on credit.
5 Bought $8,000 worth of new inventory on credit to be sold in the shop.
6 Paid rent of $900.
7 Received $2,000 cash from a client for services provided.
9 Sold inventory for $1,750 cash, and $4,150 on credit. The inventory had cost the
business $4,000
10 A short-term bank loan of $10,000 was taken out to help with some equipment
purchases.
12 Owner took home $1,500 for personal use
19 Invoiced a client for $2,100 for services provided.
21 Paid electricity of $412.
23 Paid $2,000 of accounts payable
25 Received cash for $3,000 of accounts receivable
30 Paid $300 principle off the loan and a further $35 interest.
31 Office supplies used this month total $38.

General Journal Template:

Date Details Debit Credit

May 1 Cash 50,000
capital 50,000
May3 Salaries Expense $450
Salaries Payable $450
May 5 Office Supplies Expense $80
Account Payable $80
Equipment $2,500
Accounts Payable $2,500
May 5 Inventory $8,000
Accounts payable $8,000
May 6 Rent Expense $900
 Assignment 1st | Financial Accounting

Cash $900
May 7 Cash $2,000
Accounts Recievable $2,000
May 9 Cash $1,750
Accounts Receivable $1,750
May 9 Cash $4,150
Accounts Receivable $4,150
Cost of Goods Sold $4,000
Inventory $4,000
May 10 Equipment $10,000
Bank Loan Payable $10,000
May 12 Owner’s Drawings $1,500
Cash $1,500
May 19 Accounts Receivable $2,100
Consulting Revenue $2,100
May 21 Utilities Expense $412
Cash $412
May 23 Accounts Payable $2,000
Cash $2,000
May 25 Cash $3,000
Accounts Receivable $3,000
May 30 Bank Loan Payable $300
Interest Expense $35
Cash $265
May 31 Office Supplies Expense $38
Office Supplies $38
 Assignment 1st | Financial Accounting

Ledger
Post the entries from the general journal into a general ledger using both the running balance
format and the t-form format.

T-form Template
Dr. Cr.
Cash at Bank
Date Description Amount Date Description Amount
May 1

Dr. Accounts Receivable Cr.

Date Description Amount Date Description Amount
May 7 Sales 2,000 May 7 Sales 2,000

May 9 Sales 1,750 May 9 Sales 3,750

May 9 Sales 4,150 May 9 Sales 7,900

May 19 Service Fee Revenue 2,100 10,000

May 25 cash 3,000 7,000

 Assignment 1st | Financial Accounting

Dr. Inventory Cr.

Date Description Amount Date Description Amount
May 5 Purchases 8,000 8,000
May 9 Cost of Goods Sold 4,000 4,000

Dr. Office Supplies Cr.

Date Description Amount Date Description Amount
May 5 Purchases 80 80
May 31 Office Supplies 38 42
Expense

Dr. Office Equipment Cr.

Date Description Amount Date Description Amount
May 5 Purchases 2,500 2,500

Dr. Accounts Payable Cr.

Date Description Amount Date Description Amount
May 5 Office Supplies 80 80
May 5 Equipment 2,500 2,580
May 23 Cash 2,000 580

Short-term Loan Payable

Date Description Amount Date Description Amount
May 10 Equipment 10,000 10,000
May 30 Interest Expense 35 10,035
May 30 Cash 300 9,735
 Assignment 1st | Financial Accounting

Capital
Date Description Amount Date Description Amount
May 1 Owner’s capital 50,000 50,000

Drawings
Date Description Amount Date Description Amount
May 12 Owner’s drawing 1,500 1,500

Sales
Date Description Amount Date Description Amount
May 9 Accounts Receivable 1,750 1,750
May 9 Accounts Receivable 4,150 5,900

Service Fee Revenue

Date Description Amount Date Description Amount
May 19 Accounts Receivable 2,100 2,100

Cost of Goods Sold

Date Description Amount Date Description Amount
May 9 Inventory 4,000 4,000

Electricity Expense
Date Description Amount Date Description Amount
May 21 Electricity Expense 412 412

Office Supplies Expense

Date Description Amount Date Description Amount
May 31 Office Supplies 38 38
 Assignment 1st | Financial Accounting

Rent Expense
Date Description Amount Date Description Amount
May 6 Rent Expense 900

Interest Expense
Date Description Amount Date Description Amount
May 30 Interest Expense 35 35
 Assignment 1st | Financial Accounting

Prepare a trial balance as at 31 May 2016.

Accounts/Items Debit Credit

Cash $58,662

Accounts Receivable $1,750

Inventory $4,000

Office Supplies $42

Office Equipment $2,500

Accounts Payable $6,080

Bank Loan Payable $9,700

Capital $50,000

Drawings $1,500

Salaries Payable $450

Consulting Revenue $2,100

Sales $5,900

Cost of Goods Sold $4,000

Rent Expense $900

Utilities Expense $412

Interest Expense $35

Office Supplies Expense $80

Salaries Expense $450

 Assignment 1st | Financial Accounting

Perform Accrual Entries:

A company, XYZ Ltd, has paid interest on the outstanding term

loan of $1,000,000 for March 2018 on 5th April 2022. The interest

is charged at 1% per month. Determine the accrued expense

journal entry for the example transaction, given that XYZ Ltd

reported the accounting year at the end of 31 st March 2022.

Date Details Debit Credit
March 31
Assignment 1st | Financial Accounting
Assignment 1st | Financial Accounting