Answer to Question #252900 in Accounting for abi

Question

a.      Alemu purchased office supplies worth $5,000 from various suppliers agreeing to pay the sum within two weeks (Purchase invoice #1). Two-fifth of the supplies will be used for personal purposes while the remaining is for use by AH. Three-fifth of the liability is arranged to be settled from business cash sources. 

b.     AH received $20,000 cash for consultancy services it rendered to a cash client (Cash sales invoice #1).

AH paid $3,000 cash for advertising aired through ETV (Cash payment voucher #1). 

Answer 1

Part A

AH supplies = 2/5 x 5000 = 2000

DR: Supplies $2000

CR: Accounts Payable $2000

Part B

DR: Cash $20000

CR: Revenue $20000

Part C

DR: Advertising Expenses $3,000

CR: Cash $3,000