Complete transaction analysis and show effect on net profit/total assets A summarised balance sheet for Roche Ltd
Question:
Complete transaction analysis and show effect on net profit/total assets A summarised balance sheet for Roche Ltd at 31 August 2022 was as follows:
Assets $ Liabilities and shareholders’ equity $
Cash 110 000 Accounts payable 210 000 Accounts receivable 410 000 Long-term loan 310 000 Inventory 610 000 Share capital 910 000 Prepayments 80 000 Retained profits 250 000 Equipment 610 000 Accumulated depreciation (140 000)
1 680 000 1 680 000 The following transactions occurred during September:
a Paid $100 000 of accounts payable.
b Received $300 000 from accounts receivable.
c Purchased inventory on credit for $200 000.
d Made credit sales of $700 000 (COGS was $450 000).
e Administrative expenses of $30 000 were paid in cash.
f Depreciation of $10 000 was recognised.
g Prepayments of $10 000 expired during the month.
h Dividends of $20 000 were declared and paid.
i Paid back $100 000 on the loan.
j Issued additional shares worth $500 000.
k Paid the wages bill of $50 000.
Required:
1 Show the effect of the transactions on the accounting equation using a transaction analysis table.
2 Prepare journal entries for each transaction and determine the balances of the accounts.
3 What is the effect on net profit and total assets? Write ‘increase’, ‘decrease’ or ‘no effect’ for each transaction and include dollar amounts.
Step by Step Answer:
Fundamentals Of Accounting And Financial Management
ISBN: 9780170454797
8th Edition
Authors: Professor Ken Trotman, Kerry Humphreys