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Financial Transactions - 01-12-2024

The document outlines various financial transactions of a company, including capital contributions, equipment purchases, revenue from sales, and expense payments. Key transactions include an initial investment of PKR 20,000,000, equipment purchases on credit, and various payments for salaries, utilities, and rent. Each transaction is recorded with corresponding debits and credits, reflecting changes in assets, liabilities, equity, income, and expenses.

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23 views2 pages

Financial Transactions - 01-12-2024

The document outlines various financial transactions of a company, including capital contributions, equipment purchases, revenue from sales, and expense payments. Key transactions include an initial investment of PKR 20,000,000, equipment purchases on credit, and various payments for salaries, utilities, and rent. Each transaction is recorded with corresponding debits and credits, reflecting changes in assets, liabilities, equity, income, and expenses.

Uploaded by

ADNAN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Capital Contribution by Owners

 Transaction: The company's owners invest PKR 20,000,000 as startup capital.


o Debit: Cash (Asset) PKR 20,000,000
o Credit: Share Capital (Equity) PKR 20,000,000
Explanation: The investment by owners increases the company’s cash and equity.

2. Purchase of Drilling Equipment on Credit

 Transaction: Purchased drilling equipment worth PKR 8,000,000 on credit.


o Debit: Drilling Equipment (Asset) PKR 8,000,000
o Credit: Accounts Payable (Liability) PKR 8,000,000
Explanation: Equipment purchase increases assets while creating a liability to pay
the supplier.

3. Revenue from Selling Crude Oil to Refinery on Credit

 Transaction: Sold crude oil worth PKR 12,000,000 to a refinery on credit.


o Debit: Accounts Receivable (Asset) PKR 12,000,000
o Credit: Sales Revenue (Income) PKR 12,000,000
Explanation: Revenue is recognized from the crude oil sale, and payment is due
from the customer.

4. Payment of Salaries to Employees

 Transaction: Paid PKR 2,500,000 in salaries to employees.


o Debit: Salaries Expense (Expense) PKR 2,500,000
o Credit: Cash (Asset) PKR 2,500,000
Explanation: Salaries paid reduce cash and are recorded as an expense.

5. Advance Payment for Seismic Survey

 Transaction: Paid PKR 3,000,000 as an advance for seismic survey services.


o Debit: Prepaid Expense - Survey (Asset) PKR 3,000,000
o Credit: Cash (Asset) PKR 3,000,000
Explanation: Advance payment for services increases prepaid expenses and
reduces cash.
6. Payment of Utility Bills for Refinery Operations

 Transaction: Paid PKR 150,000 for electricity and water bills.


o Debit: Utility Expense (Expense) PKR 150,000
o Credit: Cash (Asset) PKR 150,000
Explanation: Utility bills paid reduce cash and are recorded as an expense.

7. Receipt of Payment from Refinery for Crude Oil Sale

 Transaction: Received PKR 8,000,000 from the refinery for crude oil sold earlier.
o Debit: Cash (Asset) PKR 8,000,000
o Credit: Accounts Receivable (Asset) PKR 8,000,000
Explanation: Cash increases as the customer settles part of the accounts
receivable.

8. Purchase of Safety Equipment for Field Operations

 Transaction: Purchased safety equipment worth PKR 600,000 in cash.


o Debit: Safety Equipment (Asset) PKR 600,000
o Credit: Cash (Asset) PKR 600,000
Explanation: Equipment purchase increases assets and reduces cash.

9. Payment to Vendor for Drilling Equipment Purchased Earlier

 Transaction: Paid PKR 5,000,000 to the vendor for drilling equipment.


o Debit: Accounts Payable (Liability) PKR 5,000,000
o Credit: Cash (Asset) PKR 5,000,000
Explanation: Payment reduces accounts payable and cash.

10. Office Rent Payment

 Transaction: Paid PKR 400,000 for office and storage facility rent.
o Debit: Rent Expense (Expense) PKR 400,000
o Credit: Cash (Asset) PKR 400,000
Explanation: Rent payment reduces cash and is recorded as an expense.

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