Q. No 1 The following business was organized in January and it finally launched operation in February. The following is the account balance at end of Jan and transaction for the month of February. SOFTWARE COMPANY Account Balance As at Jan 31,2000 Cash 10000 Inventory (Asset) 42000 Prepaid Insurance 2000 Store furniture 10000 Store equipment 25000 Accounts payable 8500 Note payable 15500 During the month of February the following events occurred. • Feb 1: Feb rent of $1000 was paid in cash • Feb 2: Anticipating good business software purchased on account an additional $5000 of inventory. • Feb 4: The firm placed an advertisement in the local newspaper. Its cost $400 and was paid in cash. • Feb 15: Sales for the first half of the month totaled $35000.All sales but $5000 to a large corporate customer were for cash. • Feb 15: the repair expense was $26000. • Feb 16: The firm has some excess cash and invested $5000 in bonds • Feb 18: The inventory purchased on Feb 2 was paid in full. • Feb 24: Cash $4200 was received from sales on account. • Feb 25: Bonds worth $2000 were sold for $2200 cash. • Feb 28: Sales for the last half of month were $27000. All but $3000 was for cash. • Feb 28: Repair expense was $20000 • Feb 28: Salaries expense was $9000 paid in cash. On same date paid automobile expense $1000 and repairs $1500. • Feb 28: The firm earned interest of $250 on its bonds for Feb. but it will receive it in March. • Feb 28: The business paid $1500 as dividends. REQUIRED: a) Make the required journal entries. b) Prepare the trial balance as at Feb 28. c) Show the effect of each transaction on the accounting equation.
Q. No 1 The following business was organized in January and it finally launched operation in February. The following is the account balance at end of Jan and transaction for the month of February.
SOFTWARE COMPANY
Account Balance
As at Jan 31,2000
Cash
10000
Inventory (Asset)
42000
Prepaid Insurance
2000
Store furniture
10000
Store equipment
25000
Accounts payable
8500
Note payable
15500
During the month of February the following events occurred.
• Feb 1: Feb rent of $1000 was paid in cash
• Feb 2: Anticipating good business software purchased on account an additional $5000 of inventory.
• Feb 4: The firm placed an advertisement in the local newspaper. Its cost $400 and was paid in cash.
• Feb 15: Sales for the first half of the month totaled $35000.All sales but $5000 to a large corporate customer were for cash.
• Feb 15: the repair expense was $26000.
• Feb 16: The firm has some excess cash and invested $5000 in bonds
• Feb 18: The inventory purchased on Feb 2 was paid in full.
• Feb 24: Cash $4200 was received from sales on account.
• Feb 25: Bonds worth $2000 were sold for $2200 cash.
• Feb 28: Sales for the last half of month were $27000. All but $3000 was for cash.
• Feb 28: Repair expense was $20000
• Feb 28: Salaries expense was $9000 paid in cash. On same date paid automobile expense $1000 and repairs $1500.
• Feb 28: The firm earned interest of $250 on its bonds for Feb. but it will receive it in March.
• Feb 28: The business paid $1500 as dividends.
REQUIRED:
a) Make the required
b) Prepare the
c) Show the effect of each transaction on the
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