Answer to Question #168955 in Accounting for Bisrat zenebe

Question

On March 1, 2002, Tahir Muktar, a famous businessman in Addis, opened a business named “Universal Garage” which is organized as a sole proprietorship. The business is established to render car repair, maintenance and related services for fees. Below are chart of accounts for and selected transactions completed by Universal Garage in March 2002.

Mar 1 Received the following assets from its owner, Tahir: 

Cash....................................... Br, 8,300

Supplies .................................   2,000

Office Equipment...................  10,000

2 Borrowed Br 5,000 from Dashen Bank 

 3 Paid Br 1,800 for rent on a building leased for business purposes

3 Purchased welding and other repair machinery for Br 3,600 cash 

4 Paid Br 200 for a radio advertisement 

8 Sold for Br 200 cash an old office equipment with a recorded cost of Br 200 

  13 Paid weekly salary Br 1,200 

16 Received Br 4,400 from services rendered on cash  

20 Paid weekly salary Br 1,200 include transactions for other income 

20 Delivered service on credit, Br 6,000

21 Purchased additional repair machinery on account for Br 2,000 from Sámi-Engineers 

23 Received Br 5,000 additional cash investment from its owner 

24 Repaid Br 1,000 bank loan and paid Br 100 interest on bank loan 

26 Purchased supplies for Br 800 cash 

27 Paid Br 100 for customer entertainment and other items

27 Paid weekly salary Br 1,200 

31 Paid Br 500 for electricity and other utilities consumed during the month

31 Received Br 4,200 cash from credit customers   

31 Paid Tahir Br 1,800 for personal uses 

Required:

Journalize the above transactions in a two-column journal 

Post the journal entries to “T” accounts  

Prepare and complete a worksheet based on the following additional information 

Cost of supplies remained unconsumed on Mar 31 is Br 900 

The amount paid on Mar 3 is for a three-month rent

The amounts of depreciation for machinery and office equipment are estimated to be Br 560 and Br 1,900 respectively

Universal Garage usually pays Br 1,200 for employee's salary every saturday for a six-day work week ended on that day 

Interest on bank loan accrued but not paid on March 31 total Br 100

Prepare financial statements for the month

Journalize and post adjusting entries 

Journalize and post closing entries 

Prepare post-closing trial balance 

Answer 1

1.Debit cache Credit settlements with founder - 8 300

Debit materials Credit settlements with founders - 2 000

Debit Office Equipment Credit settlements with founders - 10 000

Debit settlements with founders Credit authorized capital - 20 300

2.Debit current account Credit short term loans - 5000

3.Debit payments to suppliers Credit checking account - 1800

Debit Office Equipment Credit checking account - 3600

4.Debit payments to suppliers Credit checking account -200

8.debit current account credit other income and expenses - 200

13.debit payments to staff credit checking account - 1200

16.debit cash register credit settlement with customers - 4400

20.debit payments to staff credit checking account - 1200

debit settlements with personnel customers credit revenue - 6000

21.Debit Office Equipment Credit checking account - 2000

23.Debit cache Credit settlements with founder - 5000

Debit settlements with founders Credit authorized capital - 5000

24.Debit short term loans Credit current account- 1100

26.Debit materials Credit cache - 800

27.Debit payments to suppliers Credit checking account - 100

debit payments to staff credit checking account - 1200

31.Debit payments to suppliers Credit checking account - 400

Debit cache Credit credit customers   - 4400

Debit materials Credit cache - 1800

debit main production credit depreciation -2460