ITEMS PARTICULARS DEBIT CREDIT ACCOUNTING INCREASE/

ELEMENT DECREASE

a Equipment - Pans and Molds 4,850   Asset Increase

          Cash   4,850 Asset Decrease

           

b Cash 3,800   Asset Increase

  Accounts receivable   3,800 Asset Decrease

           

c Accounts payable 2,850   Liability Decrease

          Cash   2,850 Asset Decrease

           

d Cash/Accounts receivable 4,950   Asset Increase

             Unearned revenues   4,950 Liability Increase

           

e Drawings 3,500   Equity Decrease

          Cash   3,500 Asset Decrease

           

BEYOND WALLS 1.1

1.

a. Purchase of equipment paying cash has a net zero effect on the assets of the company. 

b. Collections of accounts receivable from customers means we received cash, meaning, increase in asset. Also,
since the accounts receivable has been collected, we have to credit it, meaning, a decrease in assets as well. Net
effect of zero on the asset of the company.

c. Payment to creditors means a decrease in our accounts payable (liability), and since we paid out cash, a decrease
in asset as well.

d. Since this is a pastry industry, and base on the words used, "charged customers for ordered pastries" - we can
assume that the company received an order from the customer to provide/sell pastry to be deliver in the future. The
company charged them prior to delivery, and under accrual method, we record cash or accounts receivable initially,
and recognized unearned revenue, which is a liability. Increase in asset and increase in liability. 

e. Capital withdrawal of owner decreases equity, and since we disbursed cash, a decrease in asset as well.
2.

DATE PARTICULARS DEBIT CREDIT

Sep. 1 Cash 350,000  

       Owners Capital   350,000

  to record initial investment of owner    

       

Sep 13 Permits and Licenses 6,500  

        Cash   6,500

  to record expenses paid for licenses and permits    

       

Sep. 15 Advance to Contractor 15,000  

         Cash   15,000

  to record advance payment to contractors for    

store renovations

       

Sep. 25 Store renovations 35,000  

         Advance to Contractor   15,000

          Cash   20,000

  to record full payment to contractor for store     

renovations
3.

DATE PARTICULARS DEBIT CREDIT

Oct. 3 furniture and fixtures 42,000  

       Owners Capital   42,000

  to record initial investment of owner in furniture and    

fixtures

       

Oct. 10 Advertising expense 15,000  

        Cash   15,000

  to record expenses paid for advertising and exposure    

       

Oct. 11 Cash 62,450  

         Service revenue   62,450

  to record cash receipts from customers and special    

orders

       

Oct. 24 Utilities expense 3,570  

         Cash   3,570

  to record payment for various utilities    

       

Oct. 30 Salaries and expense 35,250  

          Cash   35,250

  to record payment of salaries to employees    

T-ACCOUNTS

CASH    

Date Debit Credit

Oct. 10   15000

Oct. 11 62,450  

Oct. 24   3,570
 Oct. 30   35,250

     

Totals 62,450 53,820

Ending bal. 8,630  

 
Furniture and    
fixtures

Date Debit Credit

Oct. 3 42,000  

Ending bal. 42,000  

Owners capital    

Date Debit Credit

Oct. 3   42,000

Ending bal.   42,000

Service revenue    

Date Debit Credit

Oct. 11   62,450

Ending bal.   62,450

Advertising expense    

Date Debit Credit

Oct. 10 15,000  

Ending bal. 15,000  

Utilities expense    

Date Debit Credit

Oct. 24 3,570  

Ending bal. 3,570  

 Salaries expense    

Date Debit Credit

Oct. 30 35,250  

Ending bal. 35,250  

BEYOND WALLS 1.3

1.
 Equipment 250,000

LESS: Scrap Value (40,000)

210,000

LESS: Accumulated depreciation (98,000)

Carrying amount 112,000

* 210,000 x (28/60) = 98,000 (ANSWER)

(60 refers to the number of months in 5 years which is 12 x 5 = 60)
(28 months is the total number of months from date of acquisition to current balance sheet date.
Aug 30, 2018 - Dec 30, 2018 = 4 Months
Jan 1, 2019 - Dec. 30, 2019 = 12 months
Jan 1, 2020 - Dec. 30, 2020 = 12 months)

2. All amounts entered in the accumulated depreciation is the depreciation as of Dec. 2019 which is last year. We
simply have to add the depreciation this year 2020.
 
Item Cost Scrap Value Amount Useful Life Yearly Depreciation

Delivery Van 1,900,000 (100,000) 1,800,000 6 years 300,000

Office Equipment 296,000 (20,000) 276,000 5 years 55,200

Furniture and Fixtures 180,000 0 180,000 5 years 36,000

Depreciation for Dec. 2020 is as follows

Delivery Van = 250,000 + 300,000 = 550,000
Office Equipment = 27,600 + 55,200 = 82,800
Furniture and Fixtures = 33,000 + 36,000 = 69,000

3.
Transaction Effect Debit Credit

1. Purchase supplies of gas and Gas and Lubrications 1,000  

lubrications oil in cash

  Cash   1,000

  Increases supplies while decreases cash. Has a net zero effect    

on the assets.

2.Paid in advertising expense to a Advertising Expense 400  

local news paper

  Cash   400

  Increase in Expense or in Owner’s equity while decreasing of    

cash

3.Receive cash from a customer Cash 4,200  

on account

  Accounts Receivable   4,200

  Increase in Cash and decrease in Accounts Receivable due to    

collection. Has a net zero effect on the assets.

4.Paid creditors on account Accounts Payable 2,500  

  Cash   2,500

  Decrease in Accounts Payable and Decrease in Cash due to    

payment.

5.Charge Customer for delivery Accounts Receivable 3,500  

service on account

  Service Revenue   3,500

  Increase in Accounts Receivable and increase in service    

revenue due to rendered service.

6.Paid cash to owner for personal Owner, Drawings 5,000  

use

  Cash    5,000

  Recognition of drawing account which decreases capital    

account and decrease of cash.