Q1.

Side representing decrease

Haircutting revenue Debit
Utilities payable Debit
Cash Credit
Accounts receivable Credit
Cleaning expense Credit
Ordinary share capital Debit
Retained earnings Debit
Owner, withdrawals Credit
Factory Credit

Q2.

In which financial statements

Rent expense I
Service revenue I
Salaries payable B
Merchandise inventory B
Prepaid insurance B
Tax expense I
Supplies B
Store equipment B
Retained earnings E
Owner, withdrawals E

Q3.
Q4.

Debit ($) Credit ($)

(1) Unearned rent revenue 2,200
Rent revenue 2,200
$13,200 x 2/12 = $2,200

(2) Insurance expense 2,400

Prepaid insurance 2,400
$2,400 x 6/6 = 2,400

(3) Depreciation expense – equipment 3,400

Accumulated depreciation – equipment 3,400
[($23,000 – 2,600) / 5 years] x 10/12

(4) Salaries expense 21,000

Salaries payable 21,000

(5) Interest receivable 490

Interest revenue 490

(6) Bad debt expense 905

Allowance for doubtful accounts 905
$103,000 x 1.5% - 640 = $905

(7) Cost of goods sold 250

Merchandise inventory 250

Q5.

Debit ($) Credit ($)

Nov. 5 Merchandise inventory 10,000
Accounts payable 10,000
500 units x $20 = $10,000

Nov. 7 Accounts payable 900

Merchandise inventory 900
45 units x $20 = $900

Nov. 15 Accounts payable 9,100

Cash [(10,000 – 900)] x (1-3%) 8,827
Merchandise inventory [(10,000 – 900)] x 3% 273

Dec. 1 Accounts receivable 5,200

Sales 5,200
 Dec. 1 Cost of goods sold 3,120
Merchandise inventory 3,120

Dec. 2 Sales returns and allowances 600

Accounts receivable 600

Dec. 2 Merchandise inventory 360

Cost of goods sold 360

Dec. 3 Accounts receivable 2,100

Sales 2,100

Dec. 3 Cost of goods sold 1,470

Merchandise inventory 1,470

Dec. 15 Cash (5,200 – 600) * (1-3%) 4,462

Sales discount (5,200 – 600) * 3% 138
Accounts receivable 4,600

Q6.

Date Goods Purchased Cost of Goods Sold Inventory Balance

January 1 320 units @ $3.10 = 992
January 9 70 units @ $3.30 320 units @ $3.10 = 992
70 units @ $3.30 = 231
= 1,223
January 25 100 units @ $3.40 320 units @ $3.10 = 992
70 units @ $3.30 = 231
100 units @ $3.40 = 340
= 1,563
January 26 320 units @ $3.10 = 992 30 units @ $3.30 = 99
40 units @ $3.30 = 132 100 units @ $3.40 = 340
= 1,124 = 439
Q7.

Nolan Company
Bank Reconciliation
June 30
Bank statement balance $30,002 Book balance $29,833
Add: Add:
Outstanding deposit (d) 2,261 Recording error on check (c) 9
Interest earned (e) 23

Deduct: Deduct:
Outstanding checks (a) 2,426 Bank service charges (b) 28
Adjusted bank balance 29,837 Adjusted book balance 29,837

Q8.

Total Cost ($) Included/ Excluded?

Invoice cost 180,000 Included
Electrical work required for installation 18,500 Included
Delivery costs 3,700 Included
Sales tax 12,940 Included
Repair costs 1,750 Excluded (as it is not a normal and
reasonable expenditure necessary
to get the asset in place and ready
for its intended use.

The cost of the equipment should be $180,000 + 18,500 + 3,700 + 12,940 = 215,140

Debit ($) Credit ($)

DD/MM Equipment 215,140
Cash 215,140
To record the purchase of PPE at cost. $180,000 +
18,500 + 3,700 + 12,940 = 215,140

Q9.

Calculate the current year depreciation expense:

Step 1. Depreciation per concert: ($65,600 – 2,000) / 200 concert = $318 per concert

Step 2. Concerts in current year: 55 concerts

So, the depreciation for current year: $318 x 55 = $17,490

Q10.

Accumulated depreciation up to the disposal date = $(82,800 – 4,000) x 2.5/10 years = $19,700;

Therefore, the carrying amount of the equipment is $82,800 – 19,700 = $63,100

Compare the carrying amount with the proceeds:

(1) $63,100

Debit ($) Credit ($)

DD/MM Accumulated depreciation 19,700
Cash 63,100
Equipment 82,800

(2) $91,500

Debit ($) Credit ($)

DD/MM Accumulated depreciation 19,700
Cash 91,500
Equipment 82,800
Gain on disposal ((91,500 – (82,800 – 19,700)) 28,400

(3) $33,900

Debit ($) Credit ($)

DD/MM Accumulated depreciation 19,700
Cash 33,900
Loss on disposal (33,900 – (82,800 – 19,700)) 29,200
Equipment 82,800

Q11.

Debit ($) Credit ($)

DD/MM Cash 540,000
Building 800,000
Share capital – ordinary 1,340,000

Q12.

Debit ($) Credit ($)

15 Apr Retained earnings 51,000
Dividends payable – ordinary 51,000

15 Dec No journal entry required on the date of record.

15 Feb Dividends payable – ordinary 51,000

Next year Cash 51,000