Accounting Answers

Dec. 1 Mr. John transferred cash from his personal account to the business to be used in

the business, Birr 150,000.

“ 1 Paid five months’ rent in advance, Birr 30,000

“ 1 Paid annual Insurance premium of Birr 7,200

“ 11 Purchased a truck for Birr 110,000 by paying Birr 60,000 Cash and giving a

notes payable for the difference.

“ 12 Purchased equipment on account, Birr 11,000

“ 13 Purchased supplies on account Birr 2400.

“ 14 Paid insurance premiums of Birr 8100

“ 15 Received cash for services completed Birr 36,000.

“ 18 Paid salaries of Birr 9000.

“ 21 Paid its liabilities for the purchase of equipment made on December 12

“ 24 Provided Service on account, Birr 52,000

“ 27 Paid utilities expense Birr 12,500.

“ 27 Paid miscellaneous expenses Birr 1,200.

“ 28 Received cash from customers on account birr 24,000

“ 30 Paid salaries to employees Birr 5,000

“ 30. The owner withdrew Birr 2,000 for personal use.

Dec. 1 Mr. John transferred cash from his personal account to the business to be used in

the business, Birr 150,000.

“ 1 Paid five months’ rent in advance, Birr 30,000

“ 1 Paid annual Insurance premium of Birr 7,200

“ 11 Purchased a truck for Birr 110,000 by paying Birr 60,000 Cash and giving a

notes payable for the difference.

“ 12 Purchased equipment on account, Birr 11,000

“ 13 Purchased supplies on account Birr 2400.

“ 14 Paid insurance premiums of Birr 8100

“ 15 Received cash for services completed Birr 36,000.

“ 18 Paid salaries of Birr 9000.

“ 21 Paid its liabilities for the purchase of equipment made on December 12

“ 24 Provided Service on account, Birr 52,000

“ 27 Paid utilities expense Birr 12,500.

“ 27 Paid miscellaneous expenses Birr 1,200.

“ 28 Received cash from customers on account birr 24,000

“ 30 Paid salaries to employees Birr 5,000

“ 30. The owner withdrew Birr 2,000 for personal use.

Required:

a) Record the above transactions in General Journal (Journalize the above transactions)

1. Choose a Company (Example: Visa, Morrisons)

2. Choose 6 Ratios you want to analyze company’s Performance 

3. Prepare their formulas

4. Gather required data from financial statements 5. Apply Formulas on Excel

6. Comment on the Results 

7. Draw a conclusion if company is sustainable ​

The following additional information as at 31 December 2021 is available.

i.] Stock as at the close of business had been valued at cost at TZS. 4,200,000.

ii.] Wages and salaries need to be accrued by TZS. 80,000.

iii.] Other operating expenses are prepaid by TZS. 30,000.

iiii.] Depreciation for the year ended 31 December 2021 has still to be provided in the books as follows:

• Equipment: 10 percent per annum using the straight line method.

Required:

Prepare BON’s Income Statement for the year ended 31 December 2021

On April 18, 20-, an accounting clerk discovered that an invoice for $250 was debited to the wrong expense account. The invoice was for advertising, but had been debited to the Rent Expense account. Prepare correcting entry below.

Consider the market for two goods that substitutes,such as pens and pencils. If a technological breakthrough reduced the cost of producing pens

a. What would happen to the supply of pens?

b. What would happen to the price of pens and the quantity demanded?

c. What effect would this change in the price of pens have on the market of pencils

You are the manager of a car dealership that sells luxury automobiles, which are normal goods. Although a recession is expected next year, you expect your client's incomes to increase over the coming year. What will you do about ordering cars for next year as compared to last year? Why?

The following data has been extracted from the business information report for Kijani Prospects Ltd. 

Business Information Report (extract) on Kijani Prospects Limited

#

Ratio Calculated

2020

2021

1) Current Ratio

2.5:1

2.2:1

2) Acid Test Ratio

0.7:1

1.1:1

3) Receivables Collection Period

49.5 days

33.3 days

4) Payables Settlement Period

24.8 days

28.7 days

5) Inventory Turnover Rate

80.7 days

63.5 days

Analyze the changes for each between 2020 and 2021, showing the potential impact upon Kijani Prospects Ltd 

in general and making reference to its management of its working capital in particular. (10 Marks)

Brief Discussion Questions

a) Why is accounting considered a language of business? How is it related to management

process?

b) Discuss about the four basic financial statement (income statement, statement of owners’

equity, balance sheet, and statement of cash flows); comparing and contrasting their

differences in merchandising firms Vs. service providing entities

c) Discuss about the four finance functions (financial management decisions)

a) Assume the following data extracted from accounting records of XYZ Company, a

merchandising firm

Gross Purchase Br. 400,000Sales returns and allowance 5,000Sales discount 1,000Purchase returns and allowance 2,000Purchase discount 500Gross sales 800,000Ending inventory 40,000Beginning inventory 50,000Transportation in 1500Operating expenses 150,000Non-operating Expenses 10,000Income Tax 30%Required: Compute Net income (net loss) for the period

b) Assume that assets and liabilities increased by Br.240,000, and Br. 120,000 respectively

during a given year. Assume the following additional particulars further

▪ Revenues generated during the year….Br.80,000

▪ Additional investment made by the owner during the year ……….Br. 70,000

▪ Amount withdrawn by the owner during the year….. $10,000

Required: Determine the amount of expense incurred during the year