Page 1 of 10 Financial Accounting – ACT 303 Following are the transactions of Shahid Afridi & Sons (SA&S) for the month of February 2020. SA&S is engaged in trading business. It imports chemicals and sells in the local market. The financial or accounting year of SA&S ends on December 31. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Shahid Afridi established its business in 2000. He injected a sum of Rs. 25,000 as capital. He registered it as sole proprietorship. Purchased land, building, vehicles and other long term assets for a sum of Rs. 45,000. SA&S paid 35,000 in cash and the remaining balance will be paid next month. Imported Soda Ash from Germany worth of Rs. 2,500. The payment will be made before the end of March 2020 Paid in cash import duty and port charges a sum of Rs. 500 Paid transport expenses in cash a sum of Rs. 250 SA&S decided to replace its old Plant & Machinery and as such imported a new Plant & Machinery from United States of America. The landing cost of the plant is worth Rs. 3,500/. The import is made against Sight Letters of Credit which was established by National Bank of Pakistan. The payment will be made soon after receiving the sight bills of exchange. To expand its business, Shahid Afridi further injected a sum of Rs. 35,000. Purchased office supplied including stationary, tissue papers, masks etc used in the plant. The total amount paid was Rs. 250 Sold Chemicals on account to Waqar Younus for Rs. 5,000. The payment will be made after 15 days. Sold different Chemicals to Sarfaraz Ahmed in cash for Rs. 3,500 Waqar Younus returned three defective chemical drums to SA&S. The total value of the chemicals was Rs. 650. Paid carriage outward expenses in cash a sum of Rs. 150 Paid Salaries and Wages for the month of February 2020 a sum of Rs. 35,000. Issued a cheque of Rs. 9,000 to New Jubilee Insurance as Prepaid Insurance for the next 9 months (March to December 2020) SA&S purchased a new Toyota Corolla for the personal use of Mr. Shahid Afridi. The invoice price of the car is Rs. 3,600 and it was paid in cash. Received a cheque of Rs. 3,000 from Waqar Younus on account of credit sales made earlier. Paid Rs. 2,500 to chemical supplier in Germany on account of credit purchases made earlier. Sold chemicals to Shadab Khan for a worth of Rs. 4,500. Shadab will make the paid in March 2020. Administrative and Distribution expenses cost SA&S a sum of Rs. 10,500 SA&S paid Rs. 5,000 to Mr. Afridi for his personal use. Adjustments: (a) Charge depreciation on fixed assets @ 10% (b) It is estimated that SA&S will not be able to collect 2% on account of credit sales made to its customers Page 2 of 10 (c) (d) (e) Office Supplies in hand is worth of Rs. 50 Insurance Expenses for the month of Feb is Rs. 1,000 Closing inventory of chemicals is worth of Rs. 250 Required: (a) Record all the above transactions and adjustments in the books of SA&S (b) Post Journal Entries in Ledger Account (c) Prepare Trial Balance, Profit & Loss Account and Balance Sheet for the month ended on February 29, 2020 Financial Accounting Quiz # 2 ID: 63563 – Syed Buzukh Ali Transactions recording 1) Cash 25000 Capital 25000 2) Land, Building other fixed assets Cash Other payables 3) Purchase (soda ash) Bills payable 4) Import duty & port charges expense 45000 35000 10000 2500 2500 500 Cash 500 5) Transport expense Cash 250 6) Plant & Machinery National Bank of Pakistan LC 3500 7) Cash 35000 250 3500 Capital 8) Supplies Cash 35000 250 250 Page 3 of 10 9) A/R waqar Younus Sales Revenue 5000 10) Cash 3500 5000 Sales Revenue 3500 11) Sales Revenue return A/R waqar Younus 650 12) Carriage expense Cash 150 13) Salaries & wages Cash 35000 14) Prepaid Insurance Jubilee Bank 9000 15) Drawing Cash 3600 16) Bank A/R waqar Younus 3000 17) bills payable (Germany) Bank 650 150 35000 9000 3600 3000 2500 2500 18) A/R Shadab khan Sales Revenue 4500 19) Administrative & distribution expense Cash 10500 20) Drawing Cash 5000 4500 10500 5000 Adjustments a) Depreciation expense Fixed assets 4850 b) Bad debits allowance Sales Revenue 100 c) Office supplier Supplies expense 50 4850 100 50 Page 4 of 10 d) Insurance expense 1000 Cash e) Closing inventory Purchase A/c 1000 250 250 Journal Entries Capital Account Date Description 2000 Business start Expand business C/F Dr Cr 25000 35000 60000 60000 B/F Cash Account Date Description 2000 Business start Purchase land building fixed assets Import duty & port charges Transport expense Capital Office supplier Cash sales to sarfaraz ahmed Carriage outward Salaries & wages Purchase personal car Administrative & distribution expense Paid owner personal expense Insurance paid C/F Dr 25000 Cr 35000 500 250 35000 250 3500 150 35000 3600 10500 5000 1000 27750 91250 B/F Fixed assets Date Description Purchase land building fixed assets Plant & Machinery Annual depreciation 60000 60000 Dr 45000 3500 91250 27750 Cr 4850 Page 5 of 10 C/F B/F Other payables Date Description Purchase land building fixed assets C/F 48500 43650 Dr 10000 10000 B/F Inventory Date Description Purchase soda ash from Germany COGS C/F B/F Accounts payable Date Description A/P Germany Paid A/P Germany Dr 2500 2500 250 Dr 43650 48500 Cr 10000 10000 10000 Cr 2250 250 250 Cr 2500 B/F 2500 2500 0 Import duty & port charges Date Description Expenses Dr 500 Cr Transport expense Date Description Expenses Dr 250 Cr Dr Cr 3500 National Bank of Pakistan LC Date Description Plant & Machinery C/F B/F 3500 3500 2500 3500 3500 Page 6 of 10 Office supplies Date Description Cash purchase Consumption C/F B/F Accounts Receivables Date Description Sales Waqar Younus Sales return waqar Younus Waqar Younus cheque received Bad debt allowance C/F B/F Sales Revenue Date Description Waqar Younus on account Sarfarz ahmed cash sales Dr 250 250 50 Dr 5000 5000 1250 Cr 200 50 250 Cr 650 3000 100 1250 5000 Dr Cr 5000 3500 Sales Return Date Description Return from Waqar Younus Dr 650 Cr Carriage outward expense Date Description Paid in cash Dr 150 Cr Dr 35000 Cr Dr 9000 Cr Salaries & wages Date Description Paid in cash Prepaid Insurance Date Description Jubilee C/F 9000 Page 7 of 10 B/F Bank Date Description Prepaid insurance Jubilee A/R waqar younus cheque Paid A/P Germany C/F 9000 9000 9000 Dr Cr 9000 3000 2500 8500 11500 B/D Drawing Date Description Purchase personal car on cash Owner personal expense C/F B/F Dr 3600 5000 8600 8600 11500 8500 Cr 8600 8600 Administrative & distribution expense Date Description Paid in cash Dr 10500 Cr Depreciation expense Date Description Annual depreciation Dr 4850 Cr Dr 100 Cr Bad Debt Allowance Date Description Annual allowance C/F B/F Insurance expense Date Description Annual allowance 100 100 Dr 1000 100 100 Cr Page 8 of 10 Trial balance Account Description Capital Drawing Cash Bank Accounts Receivable Fixed Assets Inventory Office Supplies Prepaid Insurance Bad Debt Allowance Accounts Payables Other payables NBP – LC Sales Revenue Sales Return Cost of Goods sold Supplies consumption Import duty & port charges Transport expense Carriage outward expense Salaries & wages Administrative & distribution expense Depreciation expense Insurance expense Total Dr Cr 60000 8600 27750 8500 1250 43650 250 50 9000 100 0 10000 3500 8500 650 2250 200 500 250 150 35000 10500 4850 1000 118250 118250 Page 9 of 10 Profit & Loss Gross Sales Less: Return Net Sales 8500 650 7850 Expense COGS Operating Expense Admin Expenses Depreciation 2250 37100 10500 4850 Total Expense 54700 Net Loss : -46850 Balance Sheet as on 29/02/2020 Assets Cash Bank A/R Fixed Assets Inventory Supplies Prepaid Insurance -27750 -8500 1250 43650 250 50 9000 Capital Owner Capital Less: Drawing Less Net Loss Net Capital 60000 8600 46850 4550 Liabilities Other payables 10000 Page 10 of 10 Bad Debt Allowance Total Assets : 100 18050 NBP – LC Total Liabilities Total Capital + Liabilities 3500 13500 18050