Question 1

Transaction Analysis and Debit and Credit

For each of the following transactions, indicate the accounts affected and whether the accounts affected are an asset, a liability, an equity, an income or an expense. Also indicate whether the accounts are being increased or decreased and whether the increase or decrease is a debit or credit. Ignore GST.

1. Owner gave their personal computer to the business.

2. Employed a secretary.

3. Purchased supplies on credit.

4. Paid a creditor using an electronic transfer.

5. Invoiced a customer for services performed.

6. Paid some cash and took out a loan to purchase office furniture.

7. Received cash from a customer that owed the business money.

8. Paid for an advertisement aired on television.

Questions 2 Recording transactions in Journal entries

On 1 July 2018 Nicole Andreou opened a beauty parlour. The following transactions occurred during the first month of operations (ignore GST).

July 2 Andreou invested $120000 in the business by depositing cash into a business cheque account withthe Eastpac bank.

2 Paid $1800 for the first month's rent.

3 Purchased equipment by an online bank transfer for $32000 and signed a commercial loan

Agreement for $38000.

4 Purchased supplies for $8400.

6 Paid advertising expense of $890.

16. Recorded beauty services revenue for the first half of the month of $3250 in cash and $620 on

Credit.

20. Paid insurance expense for July of $480 using an online bank transfer.

23. Received a $140 payment from customers who paid on credit in the first half of the month.

28. Andreou withdrew $560 cash for personal living expenses.

31. Recorded revenue for the second half of the month of $3680 in cash and $580 on credit.

31. Paid telephone account of $330 by electronic transfer.

Questions 3 Posting from journal to ledger, and trial balance

Continue from Question 2, post from journal to ledger and prepare trial balance.

Use the following account titles and numbers: Cash at Bank, 100; Accounts Receivable, 101; Supplies, 102; Equipment, 103; Loan Payable, 200; Nicole Andreou, Capital, 300; Nicole Andreou, Drawings, 301; Revenue, 400; Rent Expense, 500; Advertising Expense, 501; Insurance Expense, 502; Telephone Expense, 503.

Required

(a) Post the entries from the general journal to the general ledger accounts (running balance format) and enter the posting references in the general journal.

(b) Prepare a trial balance as at 31 July 2018.