[TOTAL 25 MARKS] QUESTION TWO P Calc Depot was a retail store for hand-held calculators. The store was opened in December by Barbra Akinyi, a young woman previously employed in direct computer sales for a firm specializing in business computers. Akinyi knew the importance of adequate records. One of her first decisions, therefore, was to hire Chris, Okweinba, a local accountant, to set up her book keeping systems. Okwemba wrote up the store's pre-opening financial transactions in joumal form to serve as an example. Akinyi agreed to write up the reminder of the store's December financial transactions for Okwemba's later review. Page 2 of 6 At the end of December, Akin had the December, Akini had the following me to record Cash Sh 165,000 100,000 65,000 1,485 1,485 137,500 137,500 4. 15,500 Bank loan (159) Proprietor's capital Rent Expense (December) Cash Merchandise Inventory Accounts payable Furniture & Fixtures (10 year life) Cash Advertising expense Cash Wages Expense Cash Office supplies expense Cash Utilities expense Cash 15,500 5. 1,320 1,320 6. 935 935 1,100 1,100 275 10. 11. 12. 13. 14. 15. 16. Cash sales Sh.38,000 Credit sales for December 14,850 Cash received from customers 3,614 Bills paid to merchandise suppliers. 96,195 New merchandise received on credit from suppliers.. 49,940 Akini Akinyi ascertained that the cost of merchandise sold was 38,140 Wages paid to assistant 688 Wages earned by assistant but remained unpaid by end 440 of November 1,485 Rent paid for January 2015 2,310 Insurance bill paid for one year. 226 Electricity bill received but not yet paid Purchased stationary paying Sh.660 cash and agreeing to pay the balance of Ksh.1,100 by March 31, 2015. Half of the stationary was used in December Interest on the Bank loan was to accrue from January 2015. No interest is to be recognised in December 2014 17. 418. 19. 20. 21. Required: (a) Explain the events that probably gave rise to journal entries 1 to 8. (9 Marks) Page 3 of 6 (b) Prepare the income statement for December 2014 and a statement of financial position as at December 31, 2014 (16 Marts (Round your figures to the nearest ones) TOTAL IS MARCSI ION THREE