Accounting (excl solution)

Assignment

Marks awarded: (15%)

ACC111, Semester 201

The deadline: 25^th November 2020 before 11:59 p.m

PART ONE

ABC Hardware Store had the following transactions during the year starting January 1, 2019. At the beginning of 2019, the ledger of ABC showed Cash of $5,000, opening inventory $ 3000 (300 units at 10$ per unit) and Owner’s Capital of $8,000. (ABC Co. uses the FIFO method in inventory valuation).

1. ABC invested $20,000 cash in the business.
2. Purchased a used truck for $8,000, paying $4,000 cash and the balance on account.
3. Purchased cleaning supplies for $2,100 on account.
4. Paid $1,800 cash on a 1-year insurance policy effective January 1.
5. Paid $1,500 cash on amount owed on truck and $1,400 on amount owed on cleaning supplies.
6. Paid $2,800 cash for employee salaries.
7. Paid $350 for the gasoline bill for the truck.
8. Withdraw $3000 cash for personal use.
9. On April 1, ABC purchased 500 units from Nasr Co., a supplier, for $ 15 per unit with a settlement discount of 5% if it paid the price within 10 days from the date of purchase.
10. On July 15, ABC purchased 700 units from El-Noor Co., a supplier, for $ 17 per unit with a settlement discount of 5% if it paid the price within 10 days from the date of purchase.
11. On August 1, ABC sold 1200 units to Sami Co. at a price of $ 30 per unit with a settlement discount of 4% if the price is received within 10 days from the date of sale. (The company is not expecting the customer to take the advantage of the discount).
12. On April 6, ABC paid the full amount due to Nasr Co.
13. On August 15, ABC paid the full amount due to El-Noor Co.
14. On November, 5, Sami Co. paid the full amount due to ABC Co.
15. On October 1, ABC sold 100 units at $ 28 per unit to Nora Co. that paid the price in full at the time of the transaction.

1. Journalize and post the 2019 transactions.
2. Prepare a trial balance on December 31, 2019.

PART TWO

The following transactions require adjustments in the trial balance. Prepare the adjusted trial balance.

1. Depreciation on equipment for the year was $500.
2. Half of the insurance is relevant to next year.
3. An inventory count shows $600 of cleaning supplies on hand on December 31.
4. Accrued but unpaid employee salaries were $1,000.
5. ABC Co. rents out a property for $ 100 per month. $ 1500 was received in the year ended December 31, 2019
6. ABC has a bank deposit in which it receives an interest income of $ 100 per month. At year-end, it is found that ABC received $ 600 in total.

Instructions:

31. Prepare an adjusted trial balance on December 31.
32. Prepare the income statement and owner’s equity statement for 2019 and a classified balance sheet at December 31, 2019.