Beruflich Dokumente
Kultur Dokumente
Capital
Ban Gay's capital 59,070
Ban Trai's capital 32,195
Net assets = capital 91,265
Task 3
Profit and loss statement
GRIEG COMPANY
TRADING AND PROPHIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31, JANUARY X1
Accounts Notes £ £
Sales 11,000
Cost of sales (7,000)
Gross profit 4,000
Expenses
-Depreciation expense (120)
Net profit 3,880
Balance sheet
GRIEG COMPANY
BALANCE SHEET
AS AT 31 JANUARY, 19X3
Accounts Notes Debit Credit
Current assets
Cash 11,300
Inventories 2,000
Account receivable 1,000
Total current assets 14,300
Fixed assets
Equipment 1,200
Accumulated depreciation (120)
Total fixed assets 1,080
Current liabilities
Account payable 1,000
Net current assets 13,300
14,380
Long term liabilities
Loan (500)
Net assets 13,880
Capital
Beg. Capital 10,000
Net profit 3,880
End. Capital 13,880
Appendix
Task 2
At March 1, 19X3:
Journal entry:
17,945
13,095
Depreciation
Since Ban Trai’s Furniture and Fixtures are under depreciated by 900, then the entry will be as
following:
Furniture and fixture = Ban Gay's furniture + Ban Trai's furniture - under depreciation of
furniture and fixture
Office equipment = Ban Gáy's office equipment + Ban Trai's office equipment
Accounts receivable = Ban Gáy's accounts receivable - Ban Gay's provision for bad debts + Ban
Trai's accounts receivable - Ban Trai's provision for bad debts
Prepaid expenses = Ban Gay's prepaid expenses + Ban Trai's prepaid expenses
6. Calculation of cash
Accounts payable = Ban Gay's accounts payable + Ban Trai's accounts payable
This will lead to an increase in cash, and also a rise in contributed capital (in stakeholders’
equity)
Since the company used cash to buy the equipment, then cash account will decrease and
equipment account will rise.
As inventory was purchased on credit, this transaction will create a liability, thus increasing
Loan, and having effect on inventory account. Though there is an increase in Account Payable,
this increase in be recorded in Credit side
This borrowing will lead to a rise in cash of 500, and also an increase in Account Payable
(recorded in Credit side)
5. Merchandise inventory costing 7,000 was sold for 11,000 (cash for 6,000 and on
credit for 5,000)
In this transaction, when the company sold the inventory, there was a decline in Inventory
account at 7,000 and a rise in cash for 6,000 as well as Account receivable account for 5,000.
Besides, the company also gained some profit from this transaction (4,000), and this amount will
be recorded in Gain on sale of inventory account.
The gain on sale of inventory will be treated as a Revenue account; therefore, it will be recorded
in Credit side
As money was collected, cash will increase and in respect Account Receivable will decrease
Cash is used to pay the liability, hence, cash account will decline and so will account payable
GRIEG COMPANY
LEDGER ACCOUNT
Cash
Transaction Debit Credit Transaction
1 10,000
1,200 2
4 500
5 6,000
6 4,000
8,000 8
11,300
Common stock
Transaction Debit Credit Transaction
10,000 1
10,000
Account receivable
Transaction Debit Credit Transaction
5 5,000
4,000 6
1,000
Inventory
Transaction Debit Credit Transaction
3 9,000
7,000 5
2,000
Equipment
Transaction Debit Credit Transaction
2 1,200
1,200
Account payable
Transaction Debit Credit Transaction
9,000 3
7 8,000
1,000
Loan
Transaction Debit Credit Transaction
500 3
500
Sales
Transaction Debit Credit Transaction
11,000 5
11,000
Cost of sales
Transaction Debit Credit Transaction
7 7,000
7,000
Depreciation expense
Transaction Debit Credit Transaction
8 120
120
Accumulated depreciation
Transaction Debit Credit Transaction
120 8
120