Homework no 5

1-WHAT IS THE RULE FOR RECORDING INCREASES AND DECREASES IN ACCOUNTS

IE TRANSACTIONS OF BUSINESS (EXPLAIN DEBIT AND CREDIT RULES)

2-ABC LTD STARTED TRADING IN SEPTEMBER. Following transactons took place,

Date details

1 sep. : Issued capital stock USD 900.000

4 sep. : Purchased land and buildings for usd 350,000 , paid usd 200,000 cash

And for the rest issued a note payable.

12 sep. : Purchased office supplies on account usd 600,

19 sep. : Billed clients on account for services provided usd 75,000,

29 sep. : Paid salary expense usd 24,000,

30 sep : Collected cash on account from clients billed on sept.19, usd 60,000

You are required to,

Analyse, figure out which accounts to Debit and Credit entries,

Journalise and prepare ledger accounts (T accounts) for ABC ltd.

2-GEM LTD started trading in January, following transactions took place,

Jan.18 ; Issued capital stock for 30,000

Jan.22 ; Borrowed 20,000 by issuing a note payable,

Jan.23 ; Paid for radio ad to be aired on Jan.24,

Jan.25 ; Provided services to clients and received 1,000 cash,

Jan.26 ; provided services to clients on account 2,000,

Jan.31 ; Collected 800 from clients for services performed on Jan.26,

Journalise the above entries and then calculate the CASH BALANCE on Jan.31.