Prepare the balance sheet and the statement of cash flows

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Reference no: EM132710433

Accounting For Business Decision Making Assignment - Binary University, Malaysia

Mohamad Jamal an IT graduate who is currently pursuing his M.B.A. formed a computer service business Jamal's Computer Services as a holiday into job. To start the business on May 1, he deposited $7,000 of his own money into a new hank account in the name of the business. In addition the business borrowed %3,000 at 5% per annum from RHB bank. He rented a small space for $300 per month, and hired 2 students with a monthly salary of $1,500 each per month to service customers' computers.

At the end of each month, Jamal mailed invokes to the customers. On August 31, he was ready to dissolve the business and return to university. Because he was so busy, he kept few records other than the cheque book and a list of receivables from customers.

At August 31, the customers' still owed $6,000. During the holidays, the business collected $16,000 from customers. The business cheque book lists payments for supplies totaling $500 all of which were consumed during the period. The business still owed the staff $750 salary for the final week of the holidays.

Jamal rented some office equipment from James's Office Rental. On May 1, the business signed a six-month rental agreement on the equipment and paid $1,800 for the full six months period. James's Office Rental will refund the unused portion of the prepayment if the equipment is in good shape. In order to get the refund, Jamal has kept the equipment in excellent condition. In fact the business had to pay $100 to repair a Photostat machine.

To transport employees to jobs, Jamal rented a car for $500 per month and this was paid until August. The petrol expense was $250 for the four months. The business cheque book lists a payment of $1,750 for cash withdrawals by Jamal during the period. The business paid the loan back together with the interest at the end of August. The business paid $1,000 for utilities for May until July, August utilities of $300 was unpaid

REQUIRED -

1. Prepare the Income Statement and the Statement of Owner's equity for Jamal's Computer Service for the four months May through August.

2. Prepare the Balance Sheet and the Statement of Cash Flows of Jamal's Computer Service at August 31.

3. Was Jamal's holiday work successful? Give the reason for your answer.

Reference no: EM132710433

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