1 answer

Section C: Long Question (SK2:15 marks - 1 x 15 marks] C1 - Transactions of Star...

Question:

Section C: Long Question (SK2:15 marks - 1 x 15 marks] C1 - Transactions of Star Company for the month of January 2019 are pr

Section C: Long Question (SK2:15 marks - 1 x 15 marks] C1 - Transactions of Star Company for the month of January 2019 are presented below: 1. On January 1, 2019, the owner invested $75,000 cash in the business. 2. Purchased equipment for $35,000 cash. 3. Purchased supplies on account for $8,000. 4. Received a bill for $1,250 for advertising of the current month. 5. Provided $17,500 of programming services for customers. Star company received cash of $7,500 from customers, and billed the customers with the remaining amount. 0. Paid the following January expenses in cash: salaries $4,500, rent $3,000, and utilities $1,000 7. Paid its $1,250 advertising bill in cash. 8. The owner withdrew $6,500 in cash from the business for his personal use. Required: 1- Prepare journal entries to record the above transactions. (5 marks) 2- Post to the appropriate ledger accounts. (5 marks) 3- Prepare the trial balance of Star Company on January 31, 2019. (5 marks)

Answers

1. Journal Entries during the month of January

Entry Debit Amount Credit Amount

Cash A/c Dr.

To Capital A/c

75000

75000

Equipment A/c Dr.

To Cash A/c

35000

35000

Purchases A/c Dr.

To Creditors A/c  

8000

8000

Advertisement Expense A/c Dr.

To Creditors A/c

1250

1250

Cash A/c Dr.

Receivables A/c Dr.

To Sales (Supply of services) A/c

7500

10000

17500

Salaries A/c Dr.

Rent A/c Dr.

Utilities A/c Dr.

To Cash A/c

4500

3000

1000

8500

Creditors A/c Dr.

To Cash A/c

1250

1250

Capital A/c Dr.

To Cash A/c

6500

6500

2. Ledger Accounts

CY Cash Yc Dr 35 00 0 4500 By Eguipment 7 Salaries 75000 To Copital To Sales 7 1500 300 0 Rent A7 Io00 125o 6500 raditons 7 CCr Punchases 7 Dr 2000 Creditors To 8000 Bbalance Y Cr Craditors 7 Dr bale 1250 y Purchases Adrertisement Exp To Cash 7 1250Advertisamant Expensa/ Cr Dr 1250 To Ouditons 1 250 balance /d Cr. Racaivables c Dr. To Salas 7 jo,000 balance d lo OcCr Sales 4 Or 1500 Cash 7 10000 y Rasaivahles To bauana 11500 Cr Dr Salaries To Cash 4S00 4500 balanae d Rant Cr Dr To Cash 2

3.

Trial Balance as on 31 January

Particulars Debit Amount Credit Amount
Cash A/c 31250
Capital A/c 68500
Equipment A/c 35000
Purchases A/c 8000
Creditors A/c 8000
Advertisement Expense A/c 1250
Receivables A/c 10000
Sales A/c 17500
Salaries A/c 4500
Rent A/c 3000
Utilities A/c 1000
Total 94000 94000
.

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