The following events took place on 1 February 2016. For each event, give the journal entry (if any) that should be made to record the transaction in the accounts of Smith Ltd. Clearly indicate where in the financial statements you think the accounts involved belong. State any assumptions you feel are necessary.
1. The company purchased supplies to be used immediately. The purchase price of the supplies was $5000. Only $2000 was paid in cash, on delivery. The balance is due in 30 days.
2. The company decided to rent a service vehicle for $4800 per year. A rental contract was signed on 1 February 2016, to take effect on 1 March 2016. Smith Ltd paid $400 cash to the rental company on 1 February 2016, which represented the rent for March 2016.
3. Some of Smith's repairers were not busy on 1 February. The manager had them paint the inside of a storage room to repair some water damage. Assume the repairers' salaries of $300 were paid in cash at the end of the day.
4. A shareholder sold her car to the company. The vehicle cost her $15 000 two years ago. An equivalent used vehicle would have been worth about $8000 on 1 February 2016. No cash changed hands, but the shareholder expects the company to pay her for the car eventually.
5. An invoice for $5000 was received, relating to repairs and maintenance work done in December 2015. The company's year-end is 31 December. This expense was not recorded in the 2015 financial statements.