Calculate opening capital to balance the accounting equation

Assignment Help Finance Basics

Reference no: EM131945479

Instructions for Students

Please read the following instructions carefully
- This assessment is to be completed according to the instructions given by your assessor.
- Students are allowed to take this assessment home.
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- Should you not answer the questions correctly, you will be given feedback on the results and your gaps in knowledge. You will be given another opportunity to demonstrate your knowledge and skills to be deemed competent for this unit of competency.
- If you are not sure about any aspect of this assessment, please ask for clarification from your assessor.
- Please refer to the College re-assessment and re-enrolment policy for more information.

Assessment1 - (Process financial transactions and interim report)

Question 1 Accounting Equation

J Smith commenced business on 1 November 2012 with Premises $150,000, Bank 20,000, Plant & Machinery $15,000, Inventory $10,000, Bank Loan $50,000 and Accounts Payable $8,000. Following are the transactions for the month of April after the commencement.
i. 2 November: Purchased inventory for $5,000.
ii. 4 November: J Smith made payment towards his bank loan for $2,000.
iii. 9 November: Purchase Motor Vehicle for $10,000 was on credit.
iv. 13 November J Smith purchased inventory on credit for $6,000.
v. 16 November A laptop was purchased by J Smith for cash $900
vi. 19 November: J Smith paid the Accounts payable $10,000.
vii. 21 November: J Smith took out $1,500 from the business for personal use.
viii. 22 November: J Smith sold goods for cash $5000, the cost of goods sold was $3,500
ix. 30 November: J Smith paid wages $2,500

Instruction for the students:
Process the above transactions (including the one for new business commencement) in the accounting equation format.
Hint: Calculate opening Capital to balance the accounting equation at the commencement of the business.

Question 2 Fixing Errors in Trial Balance:

The following trial balance does not balance.
The following corrections/adjustments needs to be made for errors in the trial balance:
- An amount of $1,000 posted incorrectly to the credit side of the bank account.
- An amount of $1,200 posted wrongly to the credit instead of debit side of the Wages account.
- A number of account balances placed on the wrong side of the trial balance.
- An amount of $2000 received against Accounts Receivable for previous credit sales has wrongly credited to the Accounts Payable Account.
Make the necessary adjustments in the trial balance, by placing the account balance in the correct [debit/credit] column provided.

Trial Balance			Write correct balances here
Account	Debit	Credit	Debit	Credit
Drawings		12,000
Bank Loan	11,000
Office equipment	19,500
Interest paid	820
Accounts receivable		36,330
Bank	21,100
Accounts payable	11,200
GST Collected/Payable	3,700
Insurance	1,200
Capital		50,000
Computer equipment	5,200
Sales	448,000
Advertising	4,800
Cost of goods sold		336,000
Bad debts		500
Bank fees		150
Inventory	27,500
	607,420	434,980

Specialised Journal Entries: Question 3

a) Identify the journals that would be used to record the following transactions
b) Enter the transactions from part (a) above into the appropriate journals and total each journal

Date	Transaction details	Source Documents	Amount	Inc GST	Journal ??
Mar 01	R. Stirling commenced a building supply business by depositing cash in the back	Memo	30,000
02	Purchased fixtures & fittings for cash	Chq 0001	6,600
02	Paid rent on shop premises	Chq 0002	1,100
05	Purchased stock on Credit - B Jones	Invoice 47	2,200
06	Sold goods for cash	Cash	770
06	Credit sales to E. Johnson	Invoice 11	1,100
09	Paid wages	Chq 0003	650
09	Sold goods to F Black	Invoice 12	704
10	Cash sales	Cash	2,750
13	Paid television advertising	Chq 0004	2,420
14	Cash sales	Cash	1,320
14	Sales to E. Thomson	Invoice 13	550
16	Sales to D Brown	Invoice 14	825
16	Purchases from P. Plummer	Invoice 687	792
17	Cash purchases	Chq 0005	1,650
17	Paid wages	Chq 0006	450
21	Cash purchases	Chq 0007	1,265
21	Cash sales	Cash	2,200
25	Credit sales to E. Green	Invoice 15	880
27	Received cash from F Black for payment of account in full	Receipt 01	704
28	Paid bank interest	Chq 0008	250

Question 4 Special transactions

You have been asked to record the following transactions in the accounting records of Bright Limited:
- The amount owing by Shade Supplies, an accounts receivable, of $1,650 will not be collected and is to be written-off as a bad debt. GST collected was accounted for at the time of this sale.
- An item of Motor Vehicle has been sold for $11,000 cash, including GST.
- The owner of the business has taken a lap top home for personal use. The book value of this lap top was 1,000, plus GST.
- The cheque received from Sunny Pty Ltd for $660 was dishonoured by the bank.
- The business purchased a motor vehicle on credit from Sydney Cars Ltd for $25,000, plus GST.
- The owner contributed $50,000 in additional cash to the business.

Required:
Prepare the general journal entries to reflect these transactions (dates and folios not required)

Reference no: EM131945479

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