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University of Modern Sciences

Student Name:
College of Business
Student ID: .
-------------------------------------------------------------------------------------------------------------------Accounting ACCT 102 Section 1
Assignment 2
10 Marks
Deadline for Submission November 30th
Note: Assignment should be uploaded on the portal
No marks will be given to assignments sent by e-mail

Salem Company started its operations on January 1, 2016. The following transactions took
place during the first month of operations:
Jan 1: Salem invests $480,000 cash to start the business.
Jan 5: Purchased furniture for $72,000, paying $18,000 in cash and sign a note for the remaining
balance.
Jan 8: Purchased supplies for $3,600 on credit.
Jan 12: Paid $6,300 cash for January rent.
Jan 18: Paid $1,800 cash for office supplies purchased on January 8.
Jan 24: Services billed to customers amount to $36,000.
Jan 25: Received utility bills for $5,400 for the month of January.
Jan 27: Paid $19,800 cash for salaries.
Jan 29: Received $27,000 cash from customers in payment for services billed on January 24.
Jan 31: Salem withdrew $10,100 from the business for personal use.
Required:
1- Prepare Journal entries to record the above transactions.
2- Post to the appropriate ledger accounts.
3- Prepare the trial balance on January 31, 2016.
4. Prepare financial statements for the month.

General Journal
Date

Account Title & Explanation

Jan 1

Cash

Ref.

Debit
480,000

Salem , Capital
Jan 5

Furniture

480,000
72,000

Cash

18,000
54,000

Notes Payable
Jan 8

Supplies

3,600

Accounts Payable
Jan 12

Rent Expense

3,600
6,300

Cash
Jan 18

Supplies

6,300
1,800

Cash
Jan 24

Accounts Receivable

1,800
36,000

Service Revenue
Jan 25

Utilities Expense

36,000
5,400

Utilities Payable
Jan 27

Salaries Expense

5,400
19,800

Cash
Jan 29

Cash

19,800
27,500

Service Revenue
Jan 31

Salem , Drawing
Cash

Credit

27,500
10,100
10,100

General Ledger
Cash
DATE

ITEM

POST.
REF.

Jan 1
Jan 5
Jan 12
Jan 18
Jan 27
Jan 29
Jan 31

DEBIT

CREDIT

480,000
18,000
6,300
1,800
19,800
27,500
10,100

BALANCE
DEBIT
CREDIT
480,000
462,000
455,700
453,900
434,100
461,600
451,500

Furniture
DATE

ITEM

POST.
REF.

Jan 5

DEBIT

CREDIT

BALANCE
DEBIT
CREDIT
72,000

CREDIT

BALANCE
DEBIT
CREDIT
480,000

72,000

Salem, Capital
DATE

ITEM

POST.
REF.

DEBIT

Jan 1

480,000

Salem, Drawing
DATE
Jan 31

ITEM

POST.
REF.

DEBIT
10,100

CREDIT

BALANCE
DEBIT
CREDIT
10,100

Supplies
DATE

ITEM

POST.
REF.

Jan 8
Jan 18

DEBIT

CREDIT

3,600
1,800

BALANCE
DEBIT
CREDIT
3,600
1,800

Service Revenue
DATE

ITEM

POST.
REF.

DEBIT

CREDIT

Jan 24
Jan 29

36,000
27,500

BALANCE
DEBIT
CREDIT
36,000
63,500

Rent Expense
DATE

ITEM

POST.
REF.

Jan 12

DEBIT

CREDIT

6,300

BALANCE
DEBIT
CREDIT
6,300

Utilities Expense
DATE
Jan 25

ITEM

POST.
REF.

DEBIT
5,400

CREDIT

BALANCE
DEBIT
CREDIT
5,400

Salaries Expense
DATE

ITEM

POST.
REF.

Jan 27

DEBIT

CREDIT

BALANCE
DEBIT
CREDIT
19,800

CREDIT

BALANCE
DEBIT
CREDIT
54,000

19,800

Notes Payable
DATE

ITEM

POST.
REF.

DEBIT

Jan 5

54,000

Utilities Payable
DATE

ITEM

POST.
REF.

DEBIT

CREDIT

Jan 25

5,400

BALANCE
DEBIT
CREDIT
5,400

Accounts Payable
DATE

ITEM

POST.
REF.

Jan 8
Jan 18

DEBIT

CREDIT
3,600

1,800

BALANCE
DEBIT
CREDIT
3,600
1,800

Accounts Receivable
DATE
Jan 24

ITEM

POST.
REF.

DEBIT
36,000

CREDIT

BALANCE
DEBIT
CREDIT
36,000

Trial balance
Salem Company
Trial balance
For the Year Ended January 31, 2016
ACCOUNT NAME
DEBITS
Cash
451,500
Furniture
72,000
Supplies
3,600
Accounts Payable
Notes Payable
Utilities Payable
Service Revenue
Khalifa, Capital
Khalifa, Drawing
10,100
Rent Expense
6,300
Accounts Receivable
36,000
Utilities Expense
5,400
Salaries Expense
19,800
Total
604,700

CREDITS

1,800
54,000
5,400
63,500
480,000

604,700

Salem Company
Income Statement
For The Month Ended January 31, 2016

Revenue
Services Revenue

36,000

Total Revenue

36,000

Expense
Rent Expense

6,300

Supplies Expense

1,800

Utility Expense

5,400

Salary Expense

19,800

Total Expense
Net Income

33,300
2,700

Salem Company
Owners Equity Statement
For The Month Ended January 31, 2016

Salem, capital, March 1

$0

Add: Investment

480,000

Net Income

2,700
482,700

Less: With drawing

10,000

Salem, capital, March 31

472,700

Salem Company
Balance Sheet Statement
For The Month Ended January 31, 2016
Assets
Cash

452,900

Accounts Receivable

9,000

Furniture

72,000

Supplier

1,800

Total Assets

535,700

Liabilities and Owners Equity


Liabilities
Account payable

63,000

Owners Equity
Salem, capital
Total Liabilities and Owners Equity

472,700
472,700

Salem Company
Statement of Cash Flows
For the Year Ended January 31, 2016
Cash flow from operating activities:
Cash receipt from revenues
Cash payments for expenses
Net cash provided by operating activities
Cash flow from investing activities:
Purchase of furniture
Cash flow from financing activities:
Investment by the owner
Drawing by the owner
Net increase in cash
Cash at the beginning of the period
Cash at the end of the period

$ 36,000
(33,300)
2,700
(72,000)
$ 480,000
(10,000)

470,000
452,900
0
$452,900