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Problem 1-1 Figures in $ Balance sheet of Charles & Co.

as on 31-12-2013 Asset Non Current Asset Other items Liability OE 13,000 Cash

Current Asset Cash Inventory Bank Account

Current Liability 12,000 Bank Loan 95,000 40000 160,000

Problem 1-2 Description Current Assets Non current Assets Total Assets

Figures in $ Year 1 113624 410976 524600 56142 240518 214155 13785 524600 Year 2 90442 198014 288456 40220 78585 173295 -3644 288456

Current Liabilities Noncurrent Liabilities Paid in Capital Retained earnings Total Liabilities and owner's equity

Figures shown in Red are missing Figures

Problem 1-3 Figures in $ Description Sales Cost of Goods sold Gross Margin Other Expenses Year 1 12011 3011 9000 6201 Year 2 11968 2992 8976 6429

Profit before Tax Tax Expenses Net Income

2799 1120 1679 Figures shown in Red are missing Figures

2547 1019 1528

Problem 1-4

Cash 1 2 3 4 5 6 7 8 9 10 11 20,000 -5,000 -1,000 -4,500 5,000 -1,500 1,000 -750 -500

Accounts Receivable

Supplies Inventory

1,000 5,000 -1,000

12,750

4000

-200 800

(a)

Explanation of each Transaction 1. Invested $20,000 cash 2. Purchased equipment of $7,000 ($5,000 cash & $2000 as credit) 3. Invested $1000 cash in inventory 4. $4,500 gives as salary from cash 5. Revenue 10,000 (5000 in cash & 5,000 on credit) 6. Paid $1,500 for Account payable(Creditors) 7. $1,000 received from accounts receivable(Debtors) 8. Paid rent $750 in cash 9 Paid $500 for utilities 10.Took credit $200 for travel Expenses 11 Reduces $200 from inventory for personal use

(b)

List the changes in the company's balance sheet during the month of July. Assets Current Asset OE(Cash) Inventory Account Receivable Liability Current Liability 12,750 Account Payable 800 4,000

Non Current Asset Equipments 7,000 24,550

Non Current Liability

c)

Prepare an income statement for the month (ignore the taxes) Sales Revenue 10,000

Salaries Rent Utilities Ttravel Total Margin (Net Income)

4,500 750 500 200 5,950

5,950 4,050

(d)

Explain the changes in the Cash account Cash 20,000 Investment in business with 20,000 cash 5000 Purchase Equipments of 7,000 where 5000 piad cash(20,000-5000=15,000) 1000 Invests 1000 in Inventory (15,000-1000=14000) 4,500 Gives Salary then Balance (14,000-4,500=9,500) 5,000 Sales for 10,000 in which cash sales 5,000 Bal.(9,500+5,000=14,500) 1,500 Accounts Payable is 1,500 Bal.(14,500-1,500=13,000) 1,000 Accounts receivable 1000 Bal.(13,000+1,000=14,000) 750 Pays Rent 750 Bal.(14,000-750=13,250) 500 Paid fro Uitlities 500 Bal. (13,250-500=12,750) 12,750

Closing Cash

e)

Explain why the change in Cash Account and Month's income are not same.

It is only the coincidence that Cash Account and Month's income may be the same else these two are differ

Problem 1-5 a) Cash Account Receivable

1 2 3 4 5 6 7 8 9

25,000 -500 -500 -750 -3000 2,000 -5,000

8,000

b)

Asset N.C.A Equipment

Liability OE 8,000 Retained Earnings

C.A Cash Inventory Acct Receivable Total Asets

CL 17,250 Debtors 500 8,000 33,750 Total Liabilities

c)

Prepare an income statement for the month Income Income from Commision Total Income Expenditure Rent Advertisement Salary Misc. Expence Total Expenditures Earnings

10,000 10,000

500 750 3,000 1,000 5,250 4,750

d)

Explain the changes in the Cash account 25,000 Starts with cash investment -500 Paid Rent Bal.(25,000-500=24,500)

-500 -750 -3000 2000 -5000 Closing Cash e) 17,250

Paid for Office Supply Bal.(24,500-500=24,000) Paid for Advertisement Bal.(24,000-750=23,250) Paid fro Salary Bal.(23,250-3,000=20,250) Received from Revenues Bal.(20,250+2000=22,250) Paid to Debtors Bal.(22,250-5,000=17,250)

Explain why the change in the Cash account and the month's income are not the same

It is only the coincidence that Cash Account and Month's income may be the same else these two are differ

12,000 95,000 13000

40,000

160,000

Year 3 85124 162011 247135 15583 60100 170000 1452 247135

Year 4 69090 151021 220111 17539 30222 170000 2350 220111

Year 3 11545 2886 8659 6296

Year 4 10000 2502 7498 5328

Average 11841 2963 8878 6309

2363 945 1418

2170 868 1302

2570 1028 1542

Equipments 7,000

Accounts Payable 2,000

Owner's Equity 20,000

-4,500 10,000 -1,500 -750 -500 -200 -200 23,850

200 7,000 700

Description of Transaction Investment CAPITAL EXP revenue exp Salaries Revenues Debtors payment Creditors receipt Rent Utilities Travel Personal use

700

23850 24,550

ad cash(20,000-5000=15,000)

(9,500+5,000=14,500)

ame else these two are different heads in concepts.

Supplies Inventory

Equipment

Accounts Payable

Owners Equity

25,000 -500 8,000 500 8,000 -500 -750 -3,000 10,000 -5,000 1,000 -1000

25,000 4,750

4,000

33,750

ame else these two are different heads in concepts.

% of expenses of 4th Year 25% 71%

40%

Description of transaction

Cash Investment Rent Equipment Office Supply Advertisement Salary Revenue Debtors Miscllaneous Exp.

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