HOME EXERCISE 3 - TWO ACCOUNTING PERIODS

Minna Mutanen starts a company. Do the books from the first two accounting periods.
1st accounting period
Transactions:
1. Minna invests 4500 as initial capital to the company and deposits the money to the bank account.
2. Minna pays the rent of machinery 935 by bank transfer
3. Minna buys goods to be sold forward against invoice 4920.
4. Minna pays 139 of an ad in the paper by debit card.
5. Minna buys goods to be sold to the customers. The payment of 480 is made by debit card.
6. Minna takes a bank loan of 4200, the loan is deposited to the bank account.
7. Minna sells goods to customers and receives 5140 in cash.
8. Minna pays the rent of business premises 1280 by bank transfer
9. Minna pays the purchase invoice (number 3.) by bank transfer
10. Minna sells the rest of the goods against invoice 1 430.
11. Minna pays 65 interest of the loan by bank transfer.
Do the entries and balance the books.
+
-

Cash
5,140

Equity
4,500

+
3

+
1

Bank account
4,500
935
480
139
4,200
4920
65
1280

2
4
3
6
9

Accounts payable
4920
4920

Advertising
139

Purchases
480
4920

Income Statement
2215 6570
139
5400
65

Loans
4,200

Sales receivable
1,430

+
Sales
5,140
1,430

11
8

rent expences
advertasing
purchases
interest expences

sales

cash
sales recievable
sales
loss

1249
7819 7819

loss

2nd accounting period

First you have to transfer all the balances from the balance sheet (previous year) to accounts. Notice that LOSS from the first year reduces the
so equity from the first year - loss = equity in the beginning of the second year
1.
2.
3.
4.
5.
6.
7.

Minna
Minna
Minna
Minna
Minna
Minna
Minna

gets payment of sales invoice to the bank account, value 1430

buys goods to be sold forward against invoice 5600.
sells goods to customers and receives 4200 in cash.
transfers 6900 from cash register to the bank account
pays back 1480 of the loan and pays 85 interest from bank account.
sells goods 2800 against invoice.
takes as a private withdrawal 600 from bank account.
Cash
Equity
Accounts payable

Sales

Purchases

Bank account

Income Statement

Loans

Sales receivable

ecievable

Rent expenses
935
1280

Interest expenses
65

Balance sheet
5140 4500
1,430 4,200
881
1249

equity
loans

8,700 8,700

st year reduces the equity,

Private withdrawal

Interest expenses

Balance sheet