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Individual Assignment

This document contains instructions for a major accounting assignment with multiple questions. It asks the student to: 1) Journalize and post transactions from a case study about a car repair business. Prepare a trial balance and financial statements. 2) Write short notes on key accounting principles with examples. 3) Prepare a cash flow statement and calculate financial ratios from income statements and balance sheets provided for a corporation. The assignment requires journalizing, posting, preparing trial balances and financial statements from case data, explaining accounting concepts, and performing financial analysis through ratios on two provided companies. It assesses many fundamental accounting skills.

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Muhammad Faiyam Shafiq 1911819630
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
73 views

Individual Assignment

This document contains instructions for a major accounting assignment with multiple questions. It asks the student to: 1) Journalize and post transactions from a case study about a car repair business. Prepare a trial balance and financial statements. 2) Write short notes on key accounting principles with examples. 3) Prepare a cash flow statement and calculate financial ratios from income statements and balance sheets provided for a corporation. The assignment requires journalizing, posting, preparing trial balances and financial statements from case data, explaining accounting concepts, and performing financial analysis through ratios on two provided companies. It assesses many fundamental accounting skills.

Uploaded by

Muhammad Faiyam Shafiq 1911819630
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Major

Assignment

ACT 201

Department of Accounting and Finance


School of Business and Economics
North South University

1
ACT 201 Major Assignment
Please find the question (in next page) for your Individual
assignment.

 You are required to submit both an electronic copy (via email address:
[email protected]) and a hardcopy (before final exam) of your
Assignment:

o Unless both the electronic copy and the hardcopy are received, your essay
will not be marked and you will receive a score of zero (0).

o Clearly indicate which class you are from (class day/time).

2
Accounting Assignment (Total Marks = 100)

1. Ms. Anna started her business (“Anna Car Repairing Shop”) on January 1, 2019. During the first
month of its operations, the business engaged in the following transactions:

Date Transactions
Jan 1 Anna invested cash $100,000 as initial capital to start the business.
Jan 2 An amount of $36,000 was paid as advance rent for three months.
Paid $60,000 cash on the purchase of equipment costing $80,000. The remaining amount was
Jan 3
recognized as note payable.
Jan 4 Purchased office supplies costing $17,600 on account.
Jan 13 Provided services to its customers and received $28,500 in cash.
Jan 13 Paid the accounts payable on the office supplies purchased on January 4.
Jan 14 Paid wages to its employees for the month of January, aggregating $19,100.
Provided $54,100 worth of services to its customers. They paid $32,900 and promised to pay
Jan 18
the remaining amount in the next month.
Jan 23 Received $15,300 from customers for the services provided on January 18.
Jan 25 Received $4,000 as an advance payment from customers.
Jan 26 Purchased office supplies costing $5,200 on account.
Jan 28 Paid water bill of $19,000 for January
Jan 31 Paid $5,000 advertising expense.
Jan 31 Received electricity bill of $2,470 for January.
Jan 31 Received telephone bill of $1,494 for January.
Jan 31 Miscellaneous expenses paid during the month totaled $3,470.

Instructions:
a) Journalize the transactions with explanations (Ignore the reference numbers). (16)
b) Post the transactions in the ledger account. (16)
c) Prepare a Trial Balance for Jan 31, 2019. (10)
d) Prepare an Income Statement and a classified Balance for Jan 31, 2019 based on the information
available in the trial balance. (10)

2. Write short notes on the following accounting principles with proper example: (18)
a) Cost Principle
b) Economic Entity Assumption
c) Monetary Unit Assumption
d) Going Concern
e) Periodicity
f) Revenue Recognition Principle
g) Matching Concept
h) Accrual Basis of Accounting
i) Dual Aspect of Accounting

3
3. Baker Corporation provided the following Statements for 2018-19 –

Balance Sheet 2019 2018


Assets $ $
Cash 40,000 70,000
Accounts Receivable 320,000 350,000
Inventory 460,000 320,000
Total Current Asset 820,000 740,000
Gross Fixed Assets 560,000 520,000
Accumulated Depreciation 180,000 150,000
Net Fixed Asset 380,000 370,000
Total Asset 1,200,000 1,110,000

Liabilities & Stockholders’ Equity


Current Liabilities
Accounts Payable 390,000 320,000
Notes Payable 110,000 90,000
Accrued Expense 20,000 20,000
Total Current Liabilities 520,000 430,000
Long Term Debt 320,000 350,000
Total Liabilities 840,000 780,000
Stockholders’ Equity
Common Stock at par 100,000 100,000
Share Premium Reserve 150,000 150,000
Retained Earnings 110,000 80,000
Total Liabilities & Stockholders’ Equity 1,200,000 1,110,000

Income Statement 2019


$
Sales 2,200,000
Cogs 1,420,000
Gross Profit 780,000
Operating Expenses 600,000
Operating Income (EBIT) 180,000
Interest 29,000
Earnings before Tax (EBT) 151,000
Tax (30%) 45,000
Earnings after Tax (Net Income) 106,000

Additional Information:
1. Purchased equipments paying $40,000 cash.
2. Annual depreciation expense was $30,000.
3. Paid cash dividend of $76,000.
4. No sale of fixed asset.

Required
a. Prepare a Cash Flow Statement for the year ended June 2019. (12)

b. Calculate the following Ratios for the year ended June 2019 and also indicate
the significance of each ratio – (18)

Current Ratio, Quick Ratio, Accounts Receivable Turnover, Profit Margin, Asset
4
Turnover, ROA, Return on Common Stockholders’ Equity, Debt to Asset, Times
Interest Earned ratio.

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