sengho
Sep 22, 2008, 06:35 PM
QUESTION 1
On May 1, 2008, Andalusia Travel Agency was established. The following transactions were completed during the month.
May 1 Shareholders invested RM8,000 in cash to start the business
2 Paid RM800 for office rent for the month.
3 Purchased supplies for RM500 on account.
5 Paid RM50 to advertise in the Utusan Malaysia.
9 Received RM3,000 cash for services provided.
12 Paid a RM700 cash dividend
15 Performed RM3,300 of services on account.
17 Paid RM3000 for employee salaries
20 Paid for the supplies purchased on account on May 3
23 Received a cash payment of RM2,000 for services provided on account on May 15.
26 Borrowed RM5,000 from the bank on a note payable.
29 Purchased office equipment for RM2,400 on account.
30 Paid RM150 for utilities.
Instructions
a) Show the effects of the previous transactions on the accounting equation using the following format. Include explanations for any changes in the Retained Earnings account in your analysis. Transaction May 1 is given as example. (12 marks)
ASSETS LIABILITIES STOCKHOLDERS’EQUITY
Investment
Date Cash +Account
Receivable +Supplies +Equipment =Notes
Payable +Account. Payable +Common Stock +Retained Earnings
May
1
+RM8,000
+RM8,000
On May 1, 2008, Andalusia Travel Agency was established. The following transactions were completed during the month.
May 1 Shareholders invested RM8,000 in cash to start the business
2 Paid RM800 for office rent for the month.
3 Purchased supplies for RM500 on account.
5 Paid RM50 to advertise in the Utusan Malaysia.
9 Received RM3,000 cash for services provided.
12 Paid a RM700 cash dividend
15 Performed RM3,300 of services on account.
17 Paid RM3000 for employee salaries
20 Paid for the supplies purchased on account on May 3
23 Received a cash payment of RM2,000 for services provided on account on May 15.
26 Borrowed RM5,000 from the bank on a note payable.
29 Purchased office equipment for RM2,400 on account.
30 Paid RM150 for utilities.
Instructions
a) Show the effects of the previous transactions on the accounting equation using the following format. Include explanations for any changes in the Retained Earnings account in your analysis. Transaction May 1 is given as example. (12 marks)
ASSETS LIABILITIES STOCKHOLDERS’EQUITY
Investment
Date Cash +Account
Receivable +Supplies +Equipment =Notes
Payable +Account. Payable +Common Stock +Retained Earnings
May
1
+RM8,000
+RM8,000