a.
Introduction: In the
To prepare: A schedule showing the accounting equation.
b.
Introduction: The income statement is the primary financial statement that reports revenues and expenses. It follows revenue and expense recognition principles. When the revenues exceed the expenses it is called net income, earnings, or net profit and if expenses exceed the revenue then it is called a net loss.
To prepare: An income statement of the company MT for May month.
c.
Introduction: A
To prepare: The balance sheet of company MT for May month.
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ACCOUNTING PRINCIPLES-W/WILEYPLUS
- Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2019), the company hires you to convert the cash receipts and disbursements into accrual basis revenues and expenses. The total cash receipts are summarized as follows. The accounts receivable from customers at the end of the year are 120,000. You note that the accounts receivable at the beginning of the year were 190,000. The cash sales included 30,000 of prepayments for services to be provided over the period January 1, 2019, through December 31, 2021. a. Compute the companys accrual basis gross income for 2019. b. Would you recommend that Blue use the cash method or the accrual method? Why? c. The company does not maintain an allowance for uncollectible accounts. Would you recommend that such an allowance be established for tax purposes? Explain.arrow_forwardInner Resources Company started its business on April 1, 2019. The following transactions occurred during the month of April. Prepare the journal entries in the journal on Page 1. A. The owners invested $8,500 from their personal account to the business account. B. Paid rent $650 with check #101. C. Initiated a petty cash fund $550 check #102. D. Received $750 cash for services rendered. E. Purchased office supplies for $180 with check #103. F. Purchased computer equipment $8,500, paid $1,600 with check #104 and will pay the remainder in 30 days. G. Received $1,200 cash for services rendered. H. Paid wages $560, check #105. I. Petty cash reimbursement office supplies $200, Maintenance Expense $140, Miscellaneous Expense $65. Cash on Hand $93. Check #106. J. Increased Petty Cash by $100, check #107.arrow_forwardOn July 1, 2019, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July: a. Opened a business bank account with a deposit of $30,000 from personal funds. b. Purchased office supplies on account, $3,010. c. Paid creditor on account, $1,900. d. Earned sales commissions, receiving cash, $30,690.arrow_forward
- Sammi started her business on 1 January 2021 called Trendy. You are required to prepare the GENERAL JOURNAL for the following transactions of Trendy for the first month of operations. Jan 01Sammi invested RM50, 000 cash into the business.Jan 02Trendy purchased used motor vehicle for RM20,000.Jan 08Trendy paid rent for RM4, 000.Jan 08Trendy completed work for a client and immediately received RM15, 000.Jan 12Sammi signed a RM50,000 small business loans with CIMB Bank under Trendy’s name.Jan 15Ideal Homes renovated and installed fixtures and fittings at a cost of RM3, 000. Trendy will pay the bill at a later date.Jan 15Trendy paid RM1, 000 cash for advertisement in a local magazine.Jan 28Trendy completed work for another client on credit and invoiced the client RM5, 000. The client is allowed to settle the bill within 30 days.Jan 30Trendy paid Ideal Homes that installed the fixtures and fittings earlier.Jan 30Trendy paid RM150 for usage of electricity for the month.arrow_forwardRequired: post entries to the relevant accounts in the general ledger and balance the accounts: On 1/1/2023, Jassim started his commercial business with a capital of $3,735,000 distributed over the following assets: 1500,000 cash, 700,000 cars, 350,000 goods, 1,185,000 bank, If you know that the following operations took place during January 2023: 1. On 1/3 he bought a building for $950,000 by check, and the costs of registering it amounted to $5200 and the expenses of preparing it for use amounted to $43000, which I paid in cash. 2. On 9/1 he sold his goods on account to Mahmoud for $280,000. 3. On 1/10, he bought goods from Daoud for $324,000, he paid half of them in cash, and wrote the rest as a promissory note due after two months. He also paid the costs of transporting the purchased goods, amounting to $1,800. 4. On 1/12 he sold his goods to Al-Tafa'il stores for the amount of $198,000 in cash, of which $65,000 was deposited in the bank. 5. On 1/15, he sold the most valuable car…arrow_forwardB. Mr. Abdullah formed Al-Noor Enterprises on February 2021. During the month, the following financial transactions occurred: Review and find the mistake of the following transactions which is recorded in general journal and rewrite them. 2021, February 10 Paid the month's rent OR 700 16 Withdrew OR 10,000 for personal use. 23 Collected OR 9,000 from Bahwan Company. 28 Sold goods for cash - OMR 15,000 Al-Noor Enterprises for January Date Particulars Ref. Debit Credit 2020 Feb. 11 Rent Expense 700 Cash 700 16 Abdullah, Withdrawal 10,000 Expense 10,000 10,000 Cash Accounts Payable 23 10,000 30 Sales 15,000 Cash 15,000arrow_forward
- Carla Quentin started her own consulting firm, Quentin Consulting, on May 1, 2020. The following transactions occurred during the month of May. May 1 Carla invested Tk. 7,000 cash in the business. 2 Paid Tk. 900 for office rent for the month. 3 Purchased Tk. 600 of supplies on account. 5 Paid Tk. 125 to advertise in the County News. 9 Received Tk. 4,000 cash for services provided. 12 Withdrew Tk. 1,000 cash for personal use. 15 Performed Tk. 5,400 of services on account. 17 Paid Tk. 2,500 for employee salaries. 20 Paid for the supplies purchased on account on May 3. 23 Received a cash payment of Tk. 4,000 for services provided on account on May 15. 26 Borrowed Tk. 5,000 from the bank on a note payable. 29 Purchased office equipment for Tk. 4,200 on account. 30 Paid Tk. 275 for utilities. Instruction: a) Journalize the transactions. b) Post to the ledger accounts. c) Prepare a trial balance.arrow_forwardAccounting On 1 April 2021, Michael commenced business as a plumber. His business is not registered for GST. He put into a business bank account his savings of $50,000. He also owns a van worth $11,000 which he uses solely for business purposes. Michael provided you with the following information. • Debtors (Accounts Receivable) at 31 March 2022 were $21,000 and materials on hand cost $2,000. • During the year Michael had withdrawn $1,000 per month for housekeeping and had transferred $24,000 from the business bank account to deposit for ownership of an apartment he intends to live in. • New plant and machinery had a book value of $7,500 and there was a new delivery van at $20,000 which had been purchased on 1 March 2022. When Michael bought the new delivery van, he traded in his old van for $7,000; paid $11,000 cash and got a finance company loan for the balance. • Michael owed creditors $4,000 and had an overdraft at the bank of $5,200. Required: Prepare a BALANCE SHEET as at 31…arrow_forwardPrepare an income statement for the month ended January 31,2018 General Entries: Jan5 Received $60,000 from Shophia Lebron and issued 12,000 common shares of $5 par value. Jan5 Paid $6,000 of general liability and property insurance. The disbursement by Check No. 100 was for a complete year of service. Jan6 Rented an office and furniture for $2,000 per month. Issued Check No. 101 for $6,000, representing the first and last month's rent and the security deposit.[ the security deposit (debit deposit), the last month's rent, and the current rent are to be classified separately.] Jan7 Issued Check No. 102 for $1,600 for the purchase of office supplies. Jan7 Issued Check No. 103 for $7,000 for advertising to be run in local nespaper and magazines in the month of Jan Jan10 Roxana Perini engaged My Place, House of Decor to renovate her oceanfront condominium. Received $10,000 from Roxana Perini after services were completed. Jan12 Recorded $6,000 (net 30) decorating fees earned on account…arrow_forward
- The following business transactions relate to John Clark (financial planner) for his first month of business operations in August 2020. 2020 August1:Commenced business operations with a $300 000 cash injection of personal funds. 2 Paid monthly rent $1500. 4Purchased office stationery $2000 on credit from Stationery Plus. 7Purchased office equipment on credit from Supplies Inc. $10 000. 9Sent invoice to client M Birt for services $3000. 11 Purchased MYOB software for laptop computer $700 cash. 13 M Birt paid amount outstanding. 14 Met with prospective client and negotiated provision of financial advice for client and family, quoting $5000. 17 Paid car parking permit $220. 19 Withdrew cash from business of $2000 for personal use. 22Paid WWW Ltd for monthly internet use $182. 29 Received interest from business bank account $15. Required: A. State the impact on the accounting equation for each transaction above. For example: 1 Aug Increased Cash $300,000…arrow_forwardOn July 1, 2019, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July:a. Opened a business bank account with a deposit of $25,000 from personal funds.b. Purchased office supplies on account, $1,850. c. Paid creditor on account, $1,200.d. Earned sales commissions, receiving cash, $41,500.e. Paid rent on office and equipment for the month, $3,600.f. Withdrew cash for personal use, $4,000.g. Paid automobile expenses (including rental charge) for the month, $3,050, and miscellaneous expenses, $1,600.h. Paid office salaries, $5,000.i. Determined that the cost of supplies on hand was $950; therefore, the cost of supplies used was $900.arrow_forwardIn January of 2020 Jack Daniels invested $ 200 000 from his private savings account into his business bank account. At the end of first year which ended 31 December 2020 Jack Daniels received a $400 000 loan from his banker to expand the business. He presented the following information at the end of the year S Motor vehicles 300 000 Inventory 70 000 Bank balance (Included loan amount) 415 000 Office furnishing 40 000 Trade receivables 85 000 Trade payables 90 000 Telephone bill unpaid 3 000 Loan (repayable 2030) 400 000 The total current liabilities at the end of the year is Sarrow_forward
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