Prepare
1) Necessary accounting equations of the following transactions in the given format to show their effect on
assets, liabilities and capital.
ASSETS
=
LIABILITIES
+
EQUITIES
Bank
and
cash
Fixed
Assets
a.
b.
c.
d.
e.
f.
g.
h.
Pre
Payment
=
Loan
Payables
Advances
Income
+
Capital
stock
Retain
Earnings
Started business with cash Rs 7,50,000.
Deposited into bank Rs 3,00,000
Goods purchased from R&R center of Rs 400,000.
Advertisement expenses Rs 2,50,000
Cash paid to R&R center Rs 2,00,000
Computer purchased from Loyal computer center for Rs 90,000.
Depreciation charged @10% on computer.
Cheque paid to Loyal computer center Rs 30,0000.
2) Moonlight Bay Inn is incorporated on January 2, 2012, by its three owners, each of whom contributes Rs
20,000 in cash exchange for shares of stock in the business. In addition to the sale of stock, the following
transactions are entered into during the month of January.
January 2:
A Victorian inn is purchased for Rs 50,000 in cash. An appraisal performed on this date indicates that
the land is worth Rs 15,000, and the remaining balance of purchase price is attributable to the house.
The owners estimate that the house will have an estimated useful life of 25-years and an estimated
salvage value of Rs 5000.
January 3:
A two year, 12%, Rs 30,000 promissory note was signed at second state Bank. Interest and principal
will be repaid on the maturity date of January 3, 2014.
January 4:
New furniture for the inn is purchased at a cost of Rs 15000 in cash.
The furniture has an estimated useful life of ten years and no salvage value.
January 5:
A 24-month property insurance policy is purchased for Rs 6000 in cash.
January 6:
An advertisement for the inn is placed in the local newspaper. Moonlight Bays pays Rs 450 cash for
the ad, which will run in the paper throughout January.
January 7:
Cleaning supplies are purchased on account for Rs 950. The bill is payable within 30 days.
January 15:
Wages of Rs 4,230 for the first half of the month are paid in cash.
January 16:
A guest mails the business Rs 980 in cash as a deposit for a room to be rented for two weeks. The
guest plans to stay at the inn during the last week of January and the first week of February.
January 31:
Cash receipts from rentals of rooms for the month amount to Rs 8,300.
January 31:
Cash receipts from operation of the restaurant for the month amount to Rs 6,600.
January 31:
Each stockholder is paid Rs 200 in cash dividends.
Required
i)
ii)
iii)
Journal Entries
Necessary ledger
Trial Balance