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MGT101 Financial Accounting Assignment 2 Solution Spring 2014

SEMESTER SPRING 2014
FINANCIAL ACCOUNTING (MGT101)
ASSIGNMENT # 02

DUE DATE: 22nd July 2014 MARKS: 10

QUESTION

Following data is available for a business concern on June 30, 2013:

Items Rs.
Accounts Payable 25,000
Cash 45,000
Factory Building 250,000
Equipment 74,000
Contributed Capital 85,000
Notes Payable 2,500
Land 222,000
Supplies 4,500
Retained Earnings 483,000

Further activities have been carried in July 2013:

1. Received Rs.300,000 in cash against 3,000 shares
2. Local bank has approved a loan worth Rs.15,000 that is payable on June 30, 2014
3. Paid Rs.33,000 in cash and signed a one-year note for the balance against purchase of factory
building worth Rs.83,000
4. An equipment has been purchased on cash that costs Rs.45,000
5. Purchased supplies on account worth Rs.45,000

Required:
1. Analyze each transaction of July in order to determine its effect on the accounting equation.
2. Prepare T- Accounts and find ending balance
3. Prepare Balance Sheet using T account format at July 31, 2013

For requirement no.1 follow the format provided below in example.
Example: Purchased a piece of land on account that costs Rs.50,000
Assets = Liabilities + Shareholders’ Equity
Assets  Liabilities  Shareholders’ Equity
Land        Accounts
Payable

+ 50,000       + 50,000

IMPORTANT:

Grace period of extra 24 hours after the due date is usually available to overcome uploading  difficulties. This extra time should only be used to meet the emergencies and above mentioned  due dates should always be treated as final to avoid any inconvenience.

ANSWER NO # 1:

                    ASSETS                           LIABILITIES                              SHAREHOLDER

Date Cash Equipment Supplies Building Account/payable Note /payable Capital
+300,000           +300,000
+15000       +15000    
      +50000   +50000  
-45000 +45000          
    +45000   +45000    
Total 270,000 45000 45000 50000 60000 50000 300000


                                    Total Assets = Total liabilities +share holder

       270000+45000+50000+45000 = 110000 + 300000

                           Total      410000   = 410000

Prepare T account and finding ending balance

                                 1. CASH A/C

Descriptions Descriptions
Balance b/d 45000 Factory building 33000
Capital 300,000 Equipment 45000
Account /P 15000 Balance c/d 282000
Total 360,000 Total 360,000

 

                          2. ACCOUNT PAYABLE A/C                                                        

Description Description Rs.
    Balance b/d 25000
    Cash 15000
Balance c/d 85000 Supplies 45000
Total 85000 Total 85000

 

                       3. FACTORY BUILDING A/C

Description Description Rs.
Balance b/d 25000    
Cash 33000    
Note/payable 50000 Balance c/d 333000
Total 333000 Total 333000


 

                        4. NOTES/PAYABLE A/C

Description Rs. Description Rs.
    Balance b/d 2500
Balance c/d 52500 Factory building 50000
Total 52500 Total 52500

                                

                         5. EQUIPMENT A/C

Description Description
Balance b/d 74000    
Cash 45000 Balance c/d 19000
Total 19000 Total 19000

 

                          6. SUPPLIES A/C

Description Rs. Description
Balance b/d 4500    
Account/payable 45000 Balance c/d 49500
Total 49500 Total 49500

 

             7. CAPITAL A/C

Description Description Rs.
    Balance b/d 85000
Balance c/d 385000 Cash 300000
Total 385000 Total 385000

 

ANSWER NO # 3:

         Prepare Balance Sheet using T account format at July 31, 2013:

 

             ASSETS Liabilities Shareholder
FIXED ASSETS: CURRENT LIABILITIES: EQUITY:
Land                           222000 Account/payable        85000 Capital                        385000
Factory building        333000 Note/payable               52500 Retained earnings      483000
Equipment                  119000    
CURRENT ASSETS:    
Cash                           282000    
Supplies                     49500    
Total                        1005500 Total                        137500 +  868000          =      1005500

   

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