Question

A.

i) Choose a service type of business that you would like to start and write a brief description about it which includes the name of the company, place and type of business etc.

ii) Further, list down 15 transactions done by your business in one month starting with the initial investment made by you in the firm.

The transactions may include the following and may be made more than once:

1. Investment in business

2. Purchase of assets for cash (at least 3 long term and 1 current asset)

3. Purchase of assets on credit or partly credit and partly cash (Accounts payable)

4. Payment of business expenses in cash such as for rent, insurance, advertisement etc. (at least 4)

5. Revenue earned in cash for a service provided to clients

6. Prepaid expense

7. Unearned revenue

8. Long term borrowing (Note payable or Bank loan)

9. Withdrawal of cash from business for personal use.

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B. Prepare Journal Entries (15 transactions x 0.6 marks=9 marks) and a trial balance after you calculate the balance in each account .

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C.

i) Create 4 transactions which will require adjustment entries.

ii) Show the adjustment journal entries for the above transactions (4 transactions x 2 marks = 8 marks). The transactions may include the following:

1. Depreciation on long term asset

2. Accrued expenses

3. Supplies expense

4. Revenue earned but not yet received

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D. Prepare an adjusted trial balance for the month ended

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E. Prepare the following financial statements

1. Income Statement for the month

2. Statement of Owner’s Equity for the month

3. Classified Balance Sheet as of the last day of the month .

Answer 1

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