ACCOUNTING CYCLE STEPS:

1. Analyze business transaction

2. Journalize the transaction

Hermosa Senorita Nourah and Sarah, former CBA students, had saved some cash and decided to start their own business. They surveyed the market to find what business suits their budget, and what business they know the best. Since they have some experience in makeup and beauty. They decided to open a beauty salon called Hermosa Seorita. The salon will have with a monthly accounting cycle. They have started their business on Jan 18, 2019. The following are some events that happened in 2019. 1. Jan 1. Nourah and Sarah invested 50,000 SAR in cash and 10,000 SAR in hairdryers, straighteners, and other hair equipment in exchange for 60,000 SAR ordinary shares in Hermosa Seorita. 2. Jan 1. Hermosa Seorita rented a place that cost 12,000 SAR annually to start the business. The full payment due in Dec. 31, 2019. 3. Jan 2. Hermosa Seorita paid 1200 SAR for a one-year insurance policy that will expire Dec. 31, 2019 4. Jan 3. Hermosa Seorita purchased some makeup, massage oil, and Nile polish from Sephora signing 5 months note payable in the amount of 8,000 SAR. The note required Hermosa Seorita to pay interest at an annual rate of 15%. 5. Jan 7. Hermosa Seorita haired 4 ladies on the positions starting Jan 8, 2019. Each employee agreement set the salary to be 600 SAR for a six-day work week (the salon closes on Fridays), and the salaries will be paid on the eighth day of every month. 6. Jan 12. Hermosa Seorita received total of 15,000 SAR for provided services. 7. Jan 13. Hermosa Seorita received 2,500 SAR in cash from Hind for a reservation of a makeup service to be provided on Jan 17, 2019. 8. Jan 14. Hermosa Seorita provided some services for 3000 SAR to Amal (Nourah best friend) and she agreed to pay the amount due later. 9. Jan 15. Hermosa Seorita received 1000 SAR in cash for a reservation of a massage service. The service should be provided on Feb 2, 2019. 10. Jan 17. Hermosa Seorita provided the makeup service to Hind (she had a paid reservation on Jan 13) 11. Jan 30. Hermosa Seorita paid 500 SAR utilities expenses. 12. Jan 30. Hermosa Seorita board of directors declared and paid 500 SAR cash dividends to shareholders. Additional information: makeup, massage oil, and Nile polish on hand 6000 SAR. The 4 ladies worked 21 days in Jan. The accountant updated the rent and insurance . Depreciation is 4000 SAR