Reference no: EM132781389
Problem - Transactions for the month of January of a retailer, Johan Enterprise are given as the following.
2020
Jan 1 Started in business with RM105,000 cash.
Jan 2 Put RM90,000 of the cash into a bank account.
Jan 3 Bought goods for cash RM5,500.
Jan 4 Bought goods on credit from: Eddy RM800; Franky RM930; Smith RM160; Liew RM510.
Jan 5 Bought stationery on credit from Burtons Ltd RM89.
Jan 6 Sold goods on credit to: Tomy RM170; Eric RM240; Malcom; RM326; Tim RM204.
Jan 8 Paid rent by cheque RM220.
Jan 10 Bought furniture on credit from Lorenzo Bhd RM610.
Jan 11 Paid salaries in cash RM790.
Jan 14 Returned goods to Franky RM30; Smith RM42.
Jan 15 Bought van by cheque RM6,500.
Jan 16 Received loan from Maybank by cheque RM2,000.
Jan 18 Purchases return: Tommy RM5; Malcom RM20.
Jan 21 Cash sales RM145.
Jan 24 Sold goods on credit to Eric RM130, Tim RM410; Paul RM158.
Jan 26 Johan paid the following by cheque: Franky RM900; Smith RM118.
Jan 29 Received cheques from Paul RM158; Eric RM370.
Jan 30 Received a further loan from Maybank by cash RM500.
Jan 30 Received RM614 cash from Tim.
Required -
(a) What is Accounting and why is it important in the business world? Describe the Accounting cycle with a flow chart and illustrate how accounting is carried out.
(b) Record the transactions for January showing the closing balances for each account.
(c) Extract a trial balance.
(d) Prepare Income statement for the month and Balance sheet as at month end. Briefly explain the difference between Income statement and Balance sheet.
(e) Who are the users interested in the financial information provided by Johan Enterprise and what possible use can they get from such information?