FINANCIAL ACCOUNTING ONE

CAT I

QUESTION ONE

Juan Cruz began professional practice as a system analyst on July 1. He plans to prepare a
monthly financial statement. During July, the owner completed these transactions

July 1. Owner invested sh 500,000 cash along with computer equipment that had a market value
of php. 120,000

July 2. Paid sh. 15,000 cash for the rent of office space for the month.

July 4. Purchased sh 12,000 of additional equipment on credit (due within 30 days).

July 8. He completed a work for Mr. Patrick and immediately he was paid the sh. 32,000 cash.

July 10. Completed work for Mr. simon and sent a bill for sh. 27,000 to be paid within 30 days.

July 12. Purchased additional equipment for sh. 8,000 in cash.

July 15. Paid assistant sh. 6,200 cash as wages for 15 days.

July 18. Collected sh. 15,000 on the amount owed by Mr. simon.

July 25. Paid sh 12,000 cash to settle the liability on the equipment purchased.

July 28. Owner withdrew sh. 500 cash for personal use.

July 30. Completed work for Miss Akinyi who paid only sh. 40,000 for 50% of the system
design.

July 31. Paid salary of assistant sh.700.

July 31. Received water bill, sh. 1,800 and telephone bill sh. 3,800.

Required:

i) The journal entries

ii) Ledger accounts

iii) Trial balance for this business.

QUESTION TWO
The John trading company has undertaken the following transactions during the month of May
2016.

May 01: Cash balance $2,200, bank overdraft $365.

May 03: Paid J & Co. by check $1,200, discount received from him $15.

May 05: Received from A & Co. a check for $980, discount allowed to them $20.

May 07: Deposited into bank the check received from A & Co. on May 05.

May 10: Purchased stationary for cash, $150.

May 15: Purchased merchandise for cash, $1,300.

May 15: Cash sales for the first half of the month, 2,350.

May 16: Deposited into bank $1,600.

May 18: Cash withdrawn from bank for personal expenses $150.

May 19: Issued a check for merchandise purchased, $1,650.

May 21: Drew from bank for office use, $650.

May 24: Received a check from S & Sons and deposited the same into bank, $1,560.

May 25: Paid a check to Ali Inc. for $400 and received a discount of $15.

May 27: Bought furniture for cash for office use, $390.

May 29: Paid office rent by check, $450.

May 30: Cash sales for the second half of the month $4,300.

May 31: Paid salaries by check $1,760.

May 31: Withdrew from bank for office use $1,470.

Required: Record the above transactions in a three/triple column cash book.

QUESTION THREE
MDAR Retailer

Trial Balance as at 31 December 2011

Dr. Cr.

$ $

Discount Allowed 410

Discount Received 506

Carriage Inwards 309

Carriage Outwards 218

Return Inwards 1,384

Return Outwards 810

Sales 120,320

Purchases 84,290

Stock 31 December 2010 30,816

Motor expenses 4,917

Repairs to premises 1,383

Pay 16,184

Sundry expenses 807

Rates and insurance 2,896

Premises at cost 40,000

Motor Vehicle at cost 11,160

Provision for depreciation motors as at 31 December 3,860

2010

Debtors 31,640
Creditors 24,320

Cash at bank 4,956

Cash in hand 48

Drawings 8,736

Capital 50,994

Loan from P. Holland 40,000

Bad Debts 1,314

Provision for bad debts as at 31 December 2010 658

241,468 241,468

The following should be considered on 31 December 2011

1) Stock $36,420
a) Expenses owing
b) Sundry expenses $62
2) Motor expenses $33
3) prepayments
a) Rates $166
4) Provision for bad debts to be reduced to $580
5) Depreciation for motors to be $2,100 for the year
6) Part of the premises were let to a tenant who owed $250 at 31 December 2011
7) Loan interest owing to P. Holland, $4,000

Required prepare

i) Income Statement for the year ended 31 December 2011.

ii) Balance Sheet as at 31 December 2011.