Financial Accounting I – III
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2018 Spring Q. No. 13 [10 marks]
Prepare journal entries and T-accounts for the following transactions and also prepare trial balance as on end of May 31, 2017.
- May 1, Received contribution of Rs. 20,000 from each of the two principal owners of the new business in exchange for shares of stock.
- May 8, Signed a six-months promissory note at the bank and received cash of Rs. 15,000.
- May 11, Purchased of Rs. 700 miscellaneous supplies on account.
- May 19, Billed a client Rs. 4,000 for service provided.
- May 21, Paid Rs. 1,300 from the local newspaper for the advertising.
- May 22, Received 25% of the amount billed the client on May 19.
- May 28, Purchased a computer system for Rs. 8,000 in cash.
- May 30, Paid Rs. 3,300 of salaries for May.
Solution to this question:
Cash a/c Dr. Rs. (2×20,000) 40,000
Share capital a/c Rs. 40,000
(To record the contribution of capital in exchange of shares)
Cash a/c Dr. Rs. 15,000
Notes payable a/c Rs. 15,000
(To record the issuance of six-month promissory note)
Miscellaneous supplies a/c Dr. Rs. 700
Account payable a/c Rs. 700
(To record the purchase of miscellaneous supplies on account)
Account receivable a/c Dr. Rs. 4,000
Service revenue a/c Rs. 4,000
(To record the service revenue earned but not yet received)
Advertising expenses a/c Dr. Rs. 1,300
Cash a/c Rs. 1,300
(To record the payment for advertising expenses)
Cash a/c Dr. Rs. 1,000 (i.e. 15% of 4,000)
Account receivable a/c Rs. 1,000
(To record the cash received from account receivable)
Computer a/c Dr. Rs. 8,000
Cash a/c Rs. 8,000
(To record the purchase of a computer system on cash)
Salaries expense a/c, Dr. Rs. 3,300
Cash a/c Rs. 3,300
(To record the payment of salaries for the month)
|S.N.||Particulars||Dr. Rs.||Cr. Rs.|
Share capital a/c
Notes payable a/c
Miscellaneous supplies a/c
Account payable a/c
Account receivable a/c
Service revenue a/c
Advertising expenses a/c
Salaries expense a/c
|Total||Rs. 59,700||Rs. 59,700|