Question 2. Recording Accounting Transactions, Posting to the Ledger and Trial Balance

Mafia Rat decides that she wishes to set up a new company selling Lead and Concrete Boots for fishing.

She decides to call the new company Sinking Feeling Limited.

Following are the business events that related to the company for the month of July 2024: 1) July

1: Mafia Rat withdrew $1,560,000 from her personal account and placed it into the newly opened account of Sinking Feeling Limited.

2) July 2: Sinking Feeling Limited purchased $1,400,000 of merchandise inventory on credit and another $800,000 paying cash.

3) July 5: Sinking Feeling Limited acquired a new store to sell the merchandise, and a shed to keep the goods. The store was valued at $700,000 and was paid for in cash. The shed is valued at $250,000 with $100,000 paid in cash and rest by a loan from Black Rat Bank.

4) July 7: Sinking Feeling Limited sold merchandise inventory worth $375,000 to a customer for $550,000. The customer paid $250,000 in cash and remainder on credit.

5) July 9: Sinking Feeling Limited paid the wages of the employees in cash. Wages totalled $26,000.

6) July 10: The company purchased a new Semi-Truck valued at $900,000. The company paid $300,000 in cash and rest by a loan from the bank

. 7) July 11: Sinking Feeling Limited sold merchandise inventory worth $165,000 to a customer for $325,000. The customer paid it all on credit.

8) July 14: The company signed an agreement to supply goods to Bald Head Limited to $500,000. The agreement begins in August with Bald Limited paying an initial payment for the goods and services. Total down-payment was of $85,000.

9) July 16: Mafia Rat withdrew $75,000 from the business to pay for her mother to get swimming lessons at a private clinic in the Atlantic Ocean.

10) July 18: The company paid $125,000 in advance for future fuel supplies for the companys semi-truck for it to be used in delivering goods. All the fuel will be used by end of the month.

11) July 21: The company took out a new loan from the bank to help meet working capital expenditure. The loan was for $160,000.

12) July 23: The customer that purchased merchandise on credit on July 11 paid half of outstanding balance with cash.

13) July 24: Mafia Rat advanced a loan of $120,000 in cash to the company. The loan was interest free and could be repaid at any time.

14) July 26: Sinking Feeling Limited paid the wages of the employees. Wages totalled $26,000. Half was paid in cash and the rest will be paid in 2 weeks.

15) July 30: Sinking Feeling Limited received the water bill from the water company for the amount of $20,000 paying $8,000 immediately in cash and rest to be paid next month. 16) July 31: Sinking Feeling Limited owed employees another $3,000 in unpaid wages at the end of the month. The company will pay the outstanding balance in 10 days.

Required:

1. Record the journal entries for the month of July 2024.
2. Post to the ledger accounts (i.e., T-accounts).

c. Prepare a trial balance as at the end of July 2024.

In completing your answer, only use the accounts listed on the next page. If you feel that an account is missing, then you may wish to create a new one then you must fully justify. Accounts created without justification will be ignored. Using accounts not from the list or adding without justification will be marked as incorrect.

List of Accounts to be Used Question 2

Account Name	Account No.
Cash	1000
Accounts Receivable	1100
Prepaid Expenses	1200
Merchandise Inventory	1300
Property, Plant and Equipment Store	2100
Property, Plant and Equipment Shed	2200
Property, Plant and Equipment Semi-Truck	2300
Accounts Payable	3000
Unearned Revenue	3200
Loans	4000
Shareholders Advances	4100
Owners Share Capital	5000
Sales Revenue	6000
Cost of Goods Sold	7000
Salary and Wages Expense	7100
Electricity Expense	7200
Miscellaneous Expense	7300