Financial Accounting I – III
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2016 Fall Q. No. 16 [10 marks]
Dharan Architects incorporated as licensed architects on January 1, 2014. During the first month of its operation, the following transactions occurred:
January 2: Filed articles of incorporation with the state. and issued 100,000 shares of capital stock. Cash Rs. 1,00,000 is received from new owners for the share.
Jan 3: Purchased warehouse and land for Rs. 80,000. An appraiser value the land Rs. 20,000 and the warehouse at Rs. 60,000.
Jan 4: Signed a three-year promissory note at the Third State Bank in the amount of Rs. 50,000.
Jan 15: Performed services on account that amounted to Rs. 15,900 during the month.
Jan 31: Established an open account at a local service station at the beginning of the month. Purchases of gas and oil during January amounted to Rs. 3,230. Dharan has until the 10th of the following month to pay its bill.
Solution to this question:
In the book of Dharan Architects incorporation
Cash a/c Dr. Rs. 1,00,000
Share capital a/c Rs. 1,00,000
(To record the issuance of cash and capital paid up)
Land a/c Dr. Rs. 20,000
Warehouse a/c Dr. 60,000
Cash a/c Rs. 80,000
(To record the purchase of warehouse and land)
Bank a/c Dr. Rs. 50,000
Notes payable a/c Rs. 50,000
(To record the agreement of promissory note with the bank)
Account receivable a/c Dr. Rs. 15,900
Service revenue a/c Rs. 15,900
(To record the service revenue earned but not yet received)
Utility expenses a/c Dr. Rs. 3,230
Utility payable a/c Rs. 3,230
(To record the purchase of gas and oil on account)
January 31, 2014
|S.N.||Particulars||Dr. Rs.||Cr. Rs.|
Share capital a/c
Notes payable a/c
Account receivable a/c
Service revenue a/c
Utility expenses a/c
Utility payable a/c
|Total||Rs. 1,69,130||Rs. 1,69,130|