Question 3 (Ignore GST)

On 1 August 2021, Jessies Supplies Enterprise opened up multi equipment rental business. Jessie contributed the capital of the business, $950,000 to the businesss bank account. She has asked you to be record-keeper for the business on a part-time basis.

During the first month of operation, the following transactions were undertaken by the business:

Aug 2 The business acquired property for $398,000 and a building for $210,000. A cash payment of $150,000 was made and a mortgage loan was arranged for the total balance owing.

5 Purchased gardening, maintenance and repairs equipment to hire out to customers for $555,000 from Mercy Equipment Supplies. The business paid $250,000 cash, and the remainder was due to be paid in 90 days.

8 An equipment, $3,000 was transferred from the business to the owner, Jessie, for own use.

11 An equipment worth $15,000 was found to be defective, and the business returned it to Mercy Equipment Supplies.

14 The business acquired laptops for the customer service office at a total cost of $9,000, paid by cheque.

15 Purchased long van, $95,000 from Richard Motors. An initial $9,500 is paid immediately and the rest is to be paid at the end of this month. An invoice was received from Richard Motors on the remaining outstanding balance, dated 16 August 2021 with terms 10/10, 5/15.

20 Paid $3,500 for electricity and water bills, and travelling for $1,500.

25 Supplies Enterprise income of $28,000 was received in cash.

28 Paid the remaining cash owing to Richard Motors.

29 Paid the remaining cash owing to Mercy Equipment Supplies.

30 The business paid wages of $6,200.

31 Supplies Enterprise income of $30,500 was received immediately and an additional $8,000 remained owing by customers.

Required:

Based on the above information, prepare:

(a) a Transaction Analysis Chart for the month of August.

(b) a Statement of Financial Position as at 31 August 2021.

(c) Briefly differentiate between an accrual and a prepaid.