Accounting Basics

&
Recording Process in
Accounting

Assignments & Solutions

 Transactions Analysis-2

October 2018
Oct 1. The owner invested $25,000 cash in the business. 1. Prepare a tabular analysis which
shows the effects of these
Oct 2. The company purchased $7,000 of office equipment on credit. transactions on the expanded
accounting equation with showing
Oct 3. The company received $8,000 cash for services performed. all financial statements.
Oct 4. The company paid $850 for this month’s rent. 2. Prepare journal, ledger and trial
balance for the transactions.
Oct 5. The owner withdrew $1,000 cash for personal use.
 Transactions Analysis-2

Assets = Liabilities + Owner's Equity

Accounts Owner's Owner's
Cash + Equipment = + - + Rev. - Exp.
Payable Capital Drawings
1. +25,000 +25,000

2. +7,000 +7,000

3. +8,000 +8,000

4. -850 -850

5. -1,000 -1,000

+ $7,000
$31,150 =
$7,000 $25,000+ $1,000 -
$8,000 +
$850 -

$38,150 $38,150
 Financial Statements

Owners Equity Statement:

Income Statement:
Owners Capital (Begin. of Month): $0
Revenue:
Add: Investment: $25,000
Service Performed $8,000
Net Income: $7,150
Less: Expense $32,150
Rent Expense: $(850)
Less: Drawing: $(1,000)
Net Income: $7,150
Owners Capital (End. of Month): $31,150
Balance Sheet: Financial Statements
Statement of Cash Flows:
Asset:
Cash: $31,150 Cash flows from operating activities:
Equipment: $7,000
$38,150 Cash receipts from revenue: $8,000
Cash payments for expense: ($850)
Liability: Net cash by operating activities: $7,150
Account Payable: $7,000
Cash flows for investing activities:
Owners Equity: Purchase of equipment: $0
Owners Capital : $25,000
Drawing: $(1,000) Cash flows from financing activities:
Revenue: $8,000 Investment by owners: $25,000
Expense: $(850) Owners Drawing: ($1,000)
$31,150 Net cash by financing activities: $24,000
Asset = Liability + Owners Equity Net increase in cash: $31,150
$38,150 = $7,000 + $31,150
Add: Cash at the beginning of the period: $0
$38,150 = $38,150 Cash at the end of the period: $31,150
 GENERAL JOURNAL
Date Account Title and Explanation Ref. Debit Credit
Cash 25000
October 1, 2018 Owners Capital 25000
(Cash invested in business)

Equipment 7000
2 Accounts Payable 7000
(Equipment purchased on credit)

Cash 8000
3 Service Revenue 8000
(Cash received from revenue)

Rent Expense 850

4 Cash 850
(Cash paid for rent)

Owners Drawing 1000

5 Cash 1000
(Cash withdrawn from business)
 GENERAL LEDGER

Cash No:

Date Explanation Ref. Debit Credit Balance

October 1 (Cash invested in business) J1 25000 25000

3 (Cash received from revenue) J1 8000 33000

4 (Cash paid for rent) J1 850 32150

5 (Cash withdrawn from business) J1 1000 31150

 GENERAL LEDGER

Owners Capital No:

Date Explanation Ref. Debit Credit Balance

October 1 (Cash debited in business) J1 25000 25000

GENERAL LEDGER
Equipment No:
Date Explanation Ref. Debit Credit Balance

October 2 (Equipment purchased) J1 7000 7000

GENERAL LEDGER
Accounts Payable No:
Date Explanation Ref. Debit Credit Balance

October 2 (Equipment purchased on credit) J1 7000 7000

 GENERAL LEDGER
Service Revenue No:
Date Explanation Ref. Debit Credit Balance

October 3 (Cash received from revenue) J1 8000 8000

GENERAL LEDGER
Rent Expense No:
Date Explanation Ref. Debit Credit Balance

October 4 (Cash paid for rent) J1 850 850

GENERAL LEDGER
Owners Drawing No:
Date Explanation Ref. Debit Credit Balance

October 5 (Cash credited to owners drawing) J1 1000 1000

 Trial Balance
Debit Credit

Cash $ 31150

Equipment 7000

Accounts Payable $ 7000

Owners Capital 25000

Owners Drawing 1000

Service Revenue 8000

Rent Expense 850

$ 40000 $ 40000
3. Mr. X opens his own Service business on Sep 1, 2017. During the first month of Transactions
operations, the following transactions occurred.
Sep 1. Invested $29000 cash in business.
Analysis-3
Sep 2. Purchased computer for $20000 from XYZ company ltd. On account.

Sep 3. Paid $4000 cash for June rent on storage space.

1. Prepare a tabular analysis which
Sep 4. Received $15000 cash from customers by providing service. shows the effects of these
transactions on the expanded
Sep 5. Paid $11000 cash for employee salaries. accounting equation with showing
Sep 6. Provided computer service $3000 for cash. all financial statements.
Sep 7. Paid $20000 cash to XYZ company ltd. As of transaction 2. 2. Prepare journal, ledger and trial
balance for the transactions.
Sep 8. Paid advertising expense of $1200 for cash to advertising company.
 Transactions Analysis-3
Assets = Liabilities + Owner's Equity
Accounts Accounts Owner's Owner's
Cash + + Supplies + Equipment = + - + Rev. - Exp.
Receivable Payable Capital Drawings

1. +29,000 +29,000

2. +20,000 +20,000

3. -4000
-4000
4. +15,000 +15,000

5. -11,000 -11,000

6. +3,000 +3,000

7. -20,000 -20,000

8. -1,200 -1,200

+10,800 +20,000 $0 +29,000 +18,000 -16,200

$30,800 $30,800
 Financial Statements

Owners Equity Statement:

Income Statement:
Owners Capital (Begin. of Month): $0
Revenue:
Add: Investment: $29,000
Service Performed $18,000
Net Income: $1,800
Less: Expense: $30,800
Expense: $(16,200)
Less: Drawing: $(0)
Net Income: $1,800
Owners Capital (End. of Month): $30,800
Balance Sheet: Financial Statements
Asset: Statement of Cash Flows:
Cash: $10,800
Equip.: $20,000 Cash flows from operating activities:

$30,800 Cash receipts from revenue: $18,000

Liability: Cash payments for expense: ($16,200)
Account Payable: Net cash by operating activities: $1,800
$0

Owners Equity: Cash flows for investing activities:

Owners Capital: $29,000 Purchase of equipment: $(20,000)
Revenue: $18,000
Expense: ($16,200) Cash flows from financing activities:
Investment by owners: $29,000
$30,800 Owners Drawing: $(0)
Asset = Liability + Owners Equity Net cash by financing activities: $29,000

$30,800 = $0 + $30,800 Net increase in cash: $10,800

Add: Cash at the beginning of the period: $0
$30,800 = $30,800 Cash at the end of the period: $10,800
 GENERAL JOURNAL
Date Account Title and Explanation Ref. Debit Credit
Cash 29000
September 1, 2017 Owners Capital 29000
(Cash invested in business)
Equipment 20000
2 Accounts Payable 20000
(Equipment purchased on credit)
Rent Expense 4000
3 Cash 4000
(Cash paid for rent)
Cash 15000
4 Service Revenue 15000
(Cash received from revenue)
Salary Expense 11000
5 Cash 11000
(Cash paid for salary)
Cash 3000
6 Service Revenue 3000
(Cash received from revenue)
Accounts Payable 20000
7 Cash 20000
(Cash paid for Transaction 2)
Advertising Expense 1200
8 Cash 1200
(Cash paid for advertising)
 GENERAL LEDGER

Cash No:

Date Explanation Ref. Debit Credit Balance

September 1 (Cash invested in business) J1 29000 29000

3 (Cash paid for rent) J1 4000 25000

4 (Cash received from revenue) J1 15000 40000

5 (Cash paid for salary) J1 11000 29000

6 (Cash received from revenue) J1 3000 32000
7 (Cash paid for Transaction 2) J1 20000 12000
8 (Cash paid for advertising) J1 1200 10800
GENERAL LEDGER

Owners Capital No:

Date Explanation Ref. Debit Credit Balance

September 1 (Cash debited in business) J1 29000 29000

 GENERAL LEDGER
Equipment No:
Date Explanation Ref. Debit Credit Balance

September 2 (Equipment purchased) J1 20000 20000

GENERAL LEDGER
Accounts Payable No:
Date Explanation Ref. Debit Credit Balance

September2 (Equipment purchased on credit) J1 20000 20000

September 7 (Cash paid for Accounts Payable) J1 20000 0

GENERAL LEDGER
Rent Expense No:
Date Explanation Ref. Debit Credit Balance

September 3 (Cash paid for rent) J1 4000 4000

 GENERAL LEDGER
Service Revenue No:
Date Explanation Ref. Debit Credit Balance

September 4 (Cash received from revenue) J1 15000 15000

September 6 (Cash received from revenue) J1 3000 18000

GENERAL LEDGER
Salary Expense No:
Date Explanation Ref. Debit Credit Balance

September 5 (Cash paid for salary) J1 11000 11000

GENERAL LEDGER
Advertising Expense No:
Date Explanation Ref. Debit Credit Balance

September 8 (Cash paid for advertising) J1 1200 1200

 Debit Credit
Trial Balance
Cash 10800

Equipment 20000

Accounts Payable 0

Owners Capital 29000

Service Revenue 18000

Salary Expense 11000

Rent Expense 4000

Advertising Expense 1200

47000 47000
[Link]. Johir opens his own Service business on March 30, 2017. During
the first month of
Transactions
operations, the following transactions occurred.
Analysis-4
March 1. Invested $10,000 in cash in the law practice.

March 2. Paid $800 for July rent on office space. 1. Prepare a tabular analysis which
shows the effects of these
March 3. Purchased office equipment on account $3,000. transactions on the expanded
accounting equation with showing
March 4. Provided legal services to clients for cash $1,500.
all financial statements.
March 5. Borrowed $700 cash from a bank on a note payable. 2. Prepare journal, ledger and trial
balance for the transactions.
March 6. Performed legal services for a client on account $2,000.

March 7. Paid monthly expenses: salaries $500, utilities $300, and telephone
$100.
 Transactions Analysis-4
Assets = Liabilities + Owner's Equity
Cash Accounts Account/NotesOwner's Owner's
+ + Supplies + Equipment = + - + Rev. - Exp.
Receivable Payable Capital Drawings

1. +10,000 +10,000

2. -800 -800

3. +3,000 +3,000

4. +1,500 +1,500

5. +700 +700

6. +2,000 +2,000

7. -500 -500
-300 -300
-100 -100
+10,500 +2000 +3,000 $3,700 +10,000 +3,500 -1,700

$15,500 $15,500
 Financial Statements

Owners Equity Statement:

Income Statement:
Owners Capital (Begin. of Month): $0
Revenue:
Add: Investment: $10,000
Service Performed $3,500
Net Income: $1,800
Less Expense: $11,800
Expense: $(1,700)
Less: Drawing: $0)
Net Income: $1,800
Owners Capital (End. of Month): $11,800
Balance Sheet: Financial Statements
Asset: Statement of Cash Flows:
Cash: $10,500
A/R: $2,000 Cash flows from operating activities:
Equip.: $3,000
Cash receipts from revenue: $1,500
$15,500
Cash payments for expense: ($1,700)
Liability: Net cash by operating activities: ($200)
Account Payable: $3,700
Cash flows for investing activities:
Owners Equity: Received from bank loan: $700
Owners Capital: $10,000
Revenue: $3,500 Cash flows from financing activities:
Expense: ($1,700) Investment by owners: $10,000
Owners Drawing: $(0)
$11,800 Net cash by financing activities: $10,000
Asset = Liability + Owners Equity
$15,500 = $3,700 + $11,800 Net increase in cash: $10,500
Add: Cash at the beginning of the period: $0
$15,500 = $15,500 Cash at the end of the period: $10,500
 GENERAL JOURNAL
Date Account Title and Explanation Ref. Debit Credit
Cash
March 1, 2017 Owners Capital 10000 10000
(Cash invested in business)
Rent Expense
Cash 800 800
2
(Cash paid for rent)
Equipment
Accounts Payable 3000 3000
3
(Equipment purchased on credit)
Cash
Service Revenue 1500 1500
4
(Cash received from revenue)
Cash
Note Payable 700
5 700
(Cash received from bank in cheque)
Accounts Receivable
Service Revenue 2000
6 2000
(Cash debited in A/R)
Other Expenses
Cash 900 900
7
(Cash paid for other expenses)
 GENERAL LEDGER

Cash No:

Date Explanation Ref. Debit Credit Balance

March 1 (Cash invested in business) J1 10000 10000

2 (Cash paid for rent) J1 800 9200

4 (Cash received from revenue) J1 1500 10700

5 (Cash received from bank in cheque) J1 700 11400

7 (Cash paid for other expenses) J1 900 10500

GENERAL LEDGER

Owners Capital No:

Date Explanation Ref. Debit Credit Balance

March 1 (Cash debited in business) J1 10000 10000

 GENERAL LEDGER
Rent Expense No:
Date Explanation Ref. Debit Credit Balance
March 2 (Cash paid for rent) J1 800 800

GENERAL LEDGER
Equipment No:

Date Explanation Ref. Debit Credit Balance

March 3 (Equipment purchased) J1 3000 3000

GENERAL LEDGER
Accounts Payable No:

Date Explanation Ref. Debit Credit Balance

March 3 (Equipment purchased on credit) J1 3000 3000

GENERAL LEDGER
Service Revenue No:

Date Explanation Ref. Debit Credit Balance

March 4 (Cash received from revenue) J1 1500 1500
March 6 (Cash debited to A/R) J1 2000 3500
 GENERAL LEDGER
Notes Payable No:

Date Explanation Ref. Debit Credit Balance

March 5 (Cash received in notes payable) J1 700 700

GENERAL LEDGER
Accounts Receivable No:

Date Explanation Ref. Debit Credit Balance

March 6 (A/R debited from revenue) J1 2000 2000

GENERAL LEDGER
Other Expense No:

Date Explanation Ref. Debit Credit Balance

March 7 (Cash paid for other expense) J1 900 900
 Debit Credit
Trial Balance
Cash 10500

Equipment 3000

Accounts Receivable 2000

Accounts Payable 3000

Notes Payable 700

Owners Capital 10000

Service Revenue 3500

Rent Expense 800

Other Expenses 900

17200 17200