Financial Accounting I – III
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2013 Fall Q. No. 2
The following transactions are entered in to by Nepal Motor Workshop during the first month of its operations:
Jan 1: Articles of incorporation are filed with the state, and 30,000 shares of capital stock are issued. Cash of Rs. 60,000 is received from the new owners for the share.
Jan 2: A six year promissory note is signed at the local bank. The cash received from the bank is Rs. 2,20,000.
Jan 3: An existing workshop is purchased for Rs. 1,50,000 in cash. The values assigned to the land, building, and equipment are Rs. 25,000, Rs. 75,000 and Rs. 50,000 respectively.
Jan 4: Office supplies are purchased on account for Rs. 2,500. Cash will be paid in next month.
Jan 10: Billed customer for service provided for Rs. 20,000. The a
Jan 16: Service revenue receipt from workshop during the first month of operations amount to Rs. 7,000.
Jan 25: Wages and salaries paid in the first month amount to Rs. 20,000.
Jan 30: A total Rs. 10,000 in dividends is paid the owners.
Required: Pass necessary journal entries, T-accounts and Trial balance from above-mentioned transactions. [8 + 4 + 3]
Solution to this question:
In the book of Nepal Motor Workshop
Cash a/c Dr. Rs. 60,000
Share capital a/c Rs. 60,000
(To record the issuance of shares and capital paid up)
Cash a/c Dr. Rs. 2,20,000
Notes payable a/c Rs. 2,20,000
(To record the issuance six-month promissory note)
Land a/c Dr. Rs. 25,000
Building a/c Dr. 75,000
Equipment a/c Dr. 50,000
Cash a/c Rs. 1,50,000
(To record the purchase of assets on cash)
Office supplies a/c Dr. Rs. 2,500
Account payable a/c Rs. 2,500
(To record the purchase of office supplies on account)
Account receivable a/c Dr. Rs. 20,000
Service revenue a/c Rs. 20,000
(To record the billed customer for service provided)
Cash a/c Dr. Rs. 7,000
Service revenue a/c Rs. 7,000
(To record the cash received from service provided)
Wages and salaries expenses a/c Dr. Rs. 20,000
Cash a/c Rs. 20,000
(To record the payment of wages and salaries)
Dividend a/c Dr. Rs. 10,000
Cash a/c Rs. 10,000
(To record the payment of dividends)
Nepal Motor Workshop
|Cash a/c |
Share capital a/c
Notes payable a/c
Account payable a/c
Office supplies a/c
Service revenue a/c
Account receivable a/c
Salaries & wages expenses a/c
|Total||Rs. 309,500||Rs. 309,500|
Also, see rules of journal entries