Lahore Leads University
Department Of Business Administration
Course Title: FINANCIAL ACCOUNTING-I
Course Instructor: Dr. MARIA SULTANA
ASSIGNMENT # 2
BBA 2nd
DATE: 16-04-2020
NOTE= LISTEN LECTURE 6 AND SOLVE THIS ASSIGNMENT, AND SUBMIT IT SHARPLY ON TIME (23-04-2020)
Interpreting the effects of business transaction
Question1. : SIX Transactions of ABC Company are summarized below in equation form, with each of the six transactions identified
by a b letter. For each of the transactions from a to f you are to write a separate statement explaining the nature of the transaction.
For example, the explanation of transaction a could be as follows: purchased equipment for cash at a cost of $3,200.
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash + Account Land+ Building+ Equipment= Account Payable+ [Link] Capital
Receivables +
Balances $26,000 $39,000 $45,000 $110,000 $36,000 $42,000 $214,000
(a) - 3,200 + 3,200
Balances $22,800 $39,000 $45,000 $110,000 $39,200 $42,000 $214,000
(b) + 900 - 900
Balances $23,700 $38,100 $45,000 $110,000 $39,200 $42,000 $214,000
(c) - 3,500 + 13,500 + 10,000
Balances $20,200 $38,100 $45,000 $110,000 $52,700 $52,000 $214,000
(d) - 14,500 - 14,500
Balance $5,700 $38,100 $45,000 $110,000 $52,700 $37,500 $214,000
(e) + 15,000 + 15,000
Balances $20,700 $38,100 $45,000 $110,000 $52,700 $37,500 $229,000
(f) - 3,500 + 2,100 + 2,100
Balances
$20,700 $38,100 $45,000 $110,000 $54,800 $39,600 $229,000
Recording the effects of business transaction
Question2. : Nova communications was organized on December 1 of the current year and had the following account
balances at December 31, listed in tabular form:
ASSETS = LIABILITIES + Owner’s equity
Cash + Land + Building + Office Note Payable+ Account [Link] Capital
Equipment= Payable+
Balances $37,000 $95,000 $125,000 $51,250 $80,000 $28,250 $200,000
(a)
Early in January, the following transactions were carried out by nova communication:
1. [Link], the owner, deposited $25,000 of personal funds into the business’s bank account.
2. Purchased land and a small office building for a total price of $90, 000, of which $35,000 was the value of the land and
$55,000 was the value of the building. Paid $22,500 in cash and signed a note payable for the remaining $67,500.
3. Bought several computer systems on credit for $8,500(30 day open account)
4. Obtained a loan from capital bank in the amount of $10,[Link] a note payable.
5. Paid the $28,250 account payable owed as of December 31.
Instruction:
a. List the December 31 balances of asset, liabilities and owner’s equity in tabular from shown
b. Record the effects of each of the each of the five transactions in the format illustrated on page [Link] totals for all columns
after each transaction.
Recording the effects of business transaction
Question3. : the items making up the balance sheet of triad truck rental at December 31 are listed below in tabular form similar to
the illustration of the accounting equation on page 53:.
ASSETS = LIABILITIES + Owner’s equity
Cash + Account Trucks + Office Note Payable + Account [Link] Capital
Receivable + Equipment= Payable+
Balances $9,500 $8,900 $58,000 $3,800 $20,000 $5,200 $55,000
During a short period after December 31, triad truck rental had the following transaction
1. Bought office equipment at a cost of $2,[Link] cash.
2. Collected $4,000 of accounts receivable.
3. Paid $3,200 of accounts payable.
4. Borrowed $10,000 from a bank, signed a note payable for that amount.
5. Purchased two trucks for $30,[Link] $15,000 cash and signed a note payable for the balance
6. [Link], the owner, invested $20,000 cash in the business.
Instruction:
a. List the December 31 balances of asset, liabilities and owner’s equity in tabular as shown above
b. Record the effects of each of the each of the 6 transactions in the tabular arrangement illustrated above Show totals for all
columns after each transaction.