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.

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Related Book For  book-img-for-question

Fundamentals Of Accounting And Financial Management

ISBN: 9780170454797

8th Edition

Authors: Professor Ken Trotman, Kerry Humphreys

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