Financial Accounting and Financial Management — Assignment No.
Complete Solutions
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Generated on: 2025-09-28 10:28:47
Q No. 1 — Mr. Faisal (General Store)
Transactions and analysis:
i. Investor (Mr. Faisal) invested cash Rs. 120,000.
ii. Paid rent for store Rs. 10,000.
iii. Purchased merchandise for Rs. 15,000.
iv. Sold merchandise for cash Rs. 1,500; cost Rs. 1,000.
v. Bought office supplies from Mumtaz Stationers for Rs. 500 on account.
vi. Sold merchandise to Ahmed on account Rs. 2,000; cost Rs. 1,500.
vii. Paid cash to Mumtaz Stationers Rs. 500.
viii. Received half of the amount from Ahmed (received Rs. 1,000).
ix. Paid electricity expenses Rs. 100.
x. Withdrew Rs. 500 for personal use.
Effect on Accounting Equation (summary):
Assets: Cash, Inventory, Accounts Receivable, Supplies
Liabilities: Accounts Payable
Equity: Capital, Revenues, Expenses, Drawings
Detailed ledger-like summary (after each transaction):
Start: Cash 0, Inv 0, AR 0, Supplies 0, AP 0, Capital 0, RE (bal) 0
i) Cash +120,000; Capital +120,000
ii) Cash -10,000; Rent Expense +10,000 (Equity -10,000)
iii) Inventory +15,000; Cash -15,000
iv) Cash +1,500; Sales Revenue +1,500; Inventory -1,000; COGS +1,000
v) Supplies +500; Accounts Payable +500
vi) Accounts Receivable +2,000; Sales Revenue +2,000; Inventory -1,500; COGS +1,500
vii) Cash -500; Accounts Payable -500
viii) Cash +1,000; Accounts Receivable -1,000
ix) Cash -100; Electricity Expense +100
x) Cash -500; Drawings +500
General Journal — Q1 (Date sequence)
i Cash Dr 120000 Owner invested cash
Capital (Faisal, Capital) Cr 120000
ii Rent Expense Dr 10000 Paid rent
Cash Cr 10000
iii Inventory (Merchandise) Dr 15000 Purchased merchandise
Cash Cr 15000
iv Cash Dr 1500 Sold merchandise for cash
Sales Revenue Cr 1500
Cost of Goods Sold Dr 1000 Cost of goods sold
Inventory Cr 1000
v Supplies (Office) Dr 500 Bought supplies on account
Accounts Payable Cr 500
vi Accounts Receivable (Ahmed) Dr 2000 Sold on account
Sales Revenue Cr 2000
Cost of Goods Sold Dr 1500
Inventory Cr 1500
vii Accounts Payable (Mumtaz) Dr 500 Paid supplier
Cash Cr 500
viii Cash Dr 1000 Received from Ahmed (half)
Accounts Receivable (Ahmed) Cr 1000
ix Electricity Expense Dr 100 Paid electricity
Cash Cr 100
x Drawings Dr 500 Owner withdrawal
Cash Cr 500
General Ledger (T-accounts) — key accounts (final balances):
Cash (ending): Rs. 96400
Inventory (ending): Rs. 12500
Accounts Receivable (ending): Rs. 1000
Supplies (ending): Rs. 500
Accounts Payable (ending): Rs. 0
Income and Owner's Equity summary:
Sales Revenue: Rs. 3500
Cost of Goods Sold: Rs. 2500
Rent Expense: Rs. 10000
Electricity Expense: Rs. 100
Drawings: Rs. 500
Capital (contributed): Rs. 120000
Computed Owner's Equity (ending): Rs. 110400
Total Assets: Rs. 110400 | Total Liabilities + Equity: Rs. 110400
Q No. 2 — Gray Electronic Repair Services (December transactions)
Dec 1: Owner invested cash $10,000
Dec 6: Acquired tables, chairs, shelves for $3,000 (paid cash assumed)
Dec 7a: Acquired service equipment for $16,000; paid 50% ($8,000) cash; remaining $8,000 note
payable
Dec 7b: Purchased service supplies on account $1,500
Dec 9: Received cash $1,900 for services performed
Dec 12: Performed services on account $4,250
Dec 15: Rendered services on account $3,400 (to be collected after 30 days)
Dec 22: Collected from customer in transaction #6 (collected $4,250)
Dec 23: Paid some liability from transaction #4 (assume paid $1,000 of AP)
Dec 25: Owner withdrew $1,000
Dec 29: Paid rent for December $1,500
Dec 31: Paid salaries $2,500
Journal Entries — Q2 (USD):
Dec 1 Cash Dr 10000 Owner investment
Common Stock Cr 10000
Dec 6 Furniture & Fixtures Dr 3000 Purchased furniture (paid cash)
Cash Cr 3000
Dec 7 Service Equipment Dr 16000 Equipment purchase
Cash Cr 8000 50% down payment
Notes Payable Cr 8000 Remaining balance
Dec 7 Service Supplies Dr 1500 Purchased on account
Accounts Payable Cr 1500
Dec 9 Cash Dr 1900 Cash received for services
Service Revenue Cr 1900
Dec 12 Accounts Receivable Dr 4250 Services performed on account
Service Revenue Cr 4250
Dec 15 Accounts Receivable Dr 3400 Services rendered (to be collected)
Service Revenue Cr 3400
Dec 22 Cash Dr 4250 Collected from customer (Dec 12)
Accounts Receivable Cr 4250
Dec 23 Accounts Payable Dr 1000 Paid part of liability
Cash Cr 1000
Dec 25 Drawings (Owner Withdrawals) Dr 1000 Owner withdrew cash
Cash Cr 1000
Dec 29 Rent Expense Dr 1500 Paid rent for December
Cash Cr 1500
Dec 31 Salaries Expense Dr 2500 Paid salaries
Cash Cr 2500
Posting to ledger and trial balance — compute balances (quick summary):
Cash (ending): $ -850
Furniture & Fixtures: $ 3000
Service Equipment: $ 16000
Service Supplies: $ 1500
Accounts Receivable: $ 3400
Accounts Payable: $ 500
Notes Payable: $ 8000
Service Revenue (total): $ 9550
Rent Expense: $ 1500
Salaries Expense: $ 2500
Owner's Drawings: $ 1000
Common Stock: $ 10000
Total Assets: $ 23050 | Total Liabilities + Equity: $ 23050
Trial Balance — Q2 (unadjusted) (USD)
Debits:
Cash -850
Accounts Receivable 3400
Service Supplies 1500
Furniture & Fixtures 3000
Service Equipment 16000
Rent Expense 1500
Salaries Expense 2500
Drawings 1000
Credits:
Accounts Payable 500
Notes Payable 8000
Common Stock 10000
Service Revenue 9550
Total Debits: 56950 Total Credits: 28050
Q No. 3 — Doherty Tree Cellular, Inc. (January transactions)
Jan 1: Received $100,000 and issued common stock
Jan 2: Paid $36,000 as advance rent for three months (Prepaid Rent)
Jan 3: Paid $60,000 cash on equipment purchase costing $80,000; remaining $20,000 note payable
Jan 4: Purchased office supplies on account $17,600
Jan 13: Provided services and received $28,500 in cash
Jan 13b: Paid the accounts payable for the Jan 4 supplies
Jan 18: Provided $54,100 services on account
Jan 23: Received $10,300 from customers (collection from Jan 18)
Jan 28: Paid salaries $19,100
Jan 31: Paid $5,000 dividends
Journal Entries — Q3 (USD):
Jan 1 Cash Dr 100000 Issued common stock
Common Stock Cr 100000
Jan 2 Prepaid Rent Dr 36000 Paid 3 months' rent in advance
Cash Cr 36000
Jan 3 Equipment Dr 80000 Equipment purchase
Cash Cr 60000 Cash paid
Notes Payable Cr 20000 Balance payable (1-year note)
Jan 4 Office Supplies Dr 17600 Purchased on account
Accounts Payable Cr 17600
Jan 13 Cash Dr 28500 Services for cash
Service Revenue Cr 28500
Jan 13b Accounts Payable Dr 17600 Paid AP for supplies
Cash Cr 17600
Jan 18 Accounts Receivable Dr 54100 Services on account
Service Revenue Cr 54100
Jan 23 Cash Dr 10300 Collection from customers
Accounts Receivable Cr 10300
Jan 28 Salaries Expense Dr 19100 Paid salaries
Cash Cr 19100
Jan 31 Dividends Dr 5000 Paid dividends
Cash Cr 5000
Posting and Trial Balance — Q3 (summary balances):
Cash (ending): $ 1100
Prepaid Rent (3 months): $ 36000
Equipment: $ 80000
Office Supplies: $ 17600
Accounts Receivable: $ 43800
Accounts Payable: $ 0
Notes Payable: $ 20000
Service Revenue: $ 82600
Salaries Expense: $ 19100
Dividends: $ 5000
Common Stock: $ 100000
Total Assets: $ 178500 | Total Liabilities + Equity: $ 178500
Trial Balance — Q3 (unadjusted) (USD)
Debits:
Cash 1100
Prepaid Rent 36000
Equipment 80000
Office Supplies 17600
Accounts Receivable 43800
Salaries Expense 19100
Dividends 5000
Credits:
Accounts Payable 0
Notes Payable 20000
Common Stock 100000
Service Revenue 82600