Reference no: EM132070720 , Length: word count:500

Part A

Discussion question

Discuss whether an asset needs to be legally owned to be recorded as an asset on the balance sheet (No less than 500 words).

PART B

Making general journal entries

Company XYZ has appointed you as an Accountant and you are asked to review the following transactions as at 30 June 2018, which is the current year before any adjusting entries have been made.
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(a) 08/09/2017 Purchase equipment for cash $5000
(b) 18/10/2017 Provide services to a client A for $500 on account
(c) 20/10/2018 pay the bank loan for $10000
(d) 11/12/2018 Invest additional $30000 cash into the business by the owner
(e) 01/18/2018 Collect an account receivable in cash from client A
(f) 31/01/2018 Pay wages to employees for $5000
(g) 04/02/2018 Paid the electricity bill for $100
(h) 06/04/2018 Sell a piece of equipment for $3000 in cash
(i) 05/05/2018 Withdraw cash by the owner for private usage for $500
(j) 06/06/2018 Borrow money on a long-term basis from a bank for $100000

Requirement:

1. List the effect of each of the following transactions upon any or all of the four financial statements of a business. Apart from indicating the financial statement(s) involved, use appropriate phrases such as ‘increase total assets', ‘decrease equity', ‘increase income', ‘decrease cash flow' to describe the transaction concerned.

2. Record all the necessary journals following the template below.

PART C
Prepare a Profit & Loss statement

Use the following information from the records of Preston Partners to prepare an income statement under the periodic inventory system for the year ended 30 June 2020.

Purchases                                                                     $186600

Inventory, 1 July 2019                                                       13 860

Inventory, 30 June 2020                                                    12 920

Selling and distribution expenses                                          45420

Sales                                                                              268 860

Purchases returns and allowances                                        4420

Sales returns and allowances                                              6220

Administrative expenses                                                     16460

Freight inwards                                                                 3180

Finance expenses                                                              2020