FA /Workbook Page 16

PRETTY FACE BEAUTY SALON was started by Ms Young on Jan 1, 2023.

Ref. Summary of Transactions for the year 2023.

1 Started business with $12000 in the business bank account.

2 Purchased by check; furniture for $2500 & equipment for $4000.
3 Purchased on credit air con system from Cool Inc. for $1800.
4 Purchased supplies worth $600 for check. Purchased supplies worth $400 on credit from Modern Supplies.
5 Paid by check; rental expense $1200, electricity exp. $600, staff salaries $2100, Advertising exp. $1900, license fees $300.
6 Cash collection for services rendered $9100. Billed customers for services rendered on credit $5600.
7 Supplies bought on credit $500. Amounts owed for services already received: advertising $600 and temp staff $700.
8 Received a bank loan $1000.
9 Check paid for supplies bought previously on credit for $500 after receiving 4% discount.
10 Check received from Receivables $2800. Bad debts from Receivables $200.
11 Owner withdrew for personal use $800 from bank and $100 of supplies. The owner also paid from business funds $330 for
personal expenses.
12 Equipment worth $300 was considered out of date and sold for $180 by check.
13 Depreciation expense on furniture is $450 equipment is $520 and air con system $140.
14 A customer who owed $430 has been allowed to settle by paying $400 by check before due date.
15 Supplies used / expense for the year was $1360.

Required;
1. Record the above transactions in the work sheet showing format of accounting equation.
2. Prepare the year end financial reports.

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FA /Workbook Page 17

PRETTY FACE BEAUTY SALON

ASSETS = LIABILITY + OE
Retained
Debtor = Creditor CAPITAL Profit Profit Details
REF Bank Furn Equip Aircon Supplies A/R = B Loan A/P R (E)

BAL

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 FA /Workbook Page 18

PRETTY FACE BEAUTY SALON

ASSETS = LIABILITY + OE
Retained
= CAPITAL Profit Profit details
REF Bank Furn Equip aircon supplies A/R = B Loan A/P R (E)
1 12000 = 12000
2 -2500 2500 =
-4000 4000 =
3 1800 = 1800
4 -600 600 =
4 400 = 400
5 -1200 = -1200 Rent exp
-600 = -600 Elect exp
-2100 = -2100 Staff salaries
-1900 = -1900 Advert exp.
-300 = -300 License fees
6 9100 = 9100 Service Revenue
5600 = 5600 Service Revenue
7 500 = 500
= 600 -600 Advert exp
= 700 -700 Temp staff
8 1000 = 1000
9 -480 = -500 20 Discount received
10 2800 -2800 =
-200 = -200 Bad debts
11 -800 = -800
-100 = -100
-330 = -330
12 180 -300 = -120 Loss on sale
13 -450 -520 -140 = -1110 Depreciation exp
14 400 -430 = -30 Discount allowed
15 -1360 = -1360 Supplies expense
= 4500 Net Profit
= 4500 -4500 Profit Transfer
BAL 10670 2050 3180 1660 40 2170 = 1000 3500 10770 4500 0
19770 = 19770

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FA /Workbook Page 19

PRETTY FACE BEAUTY SALON

STATEMENT OF FINANCIAL INCOME STATEMENT FOR THE Draft CASH FLOW STATEMENT FOR
POSITIONAS AT 31 DEC 2023 YEAR ENDED 31 DEC 2023 THE YEAR ENDED 31 DEC 2023
$ $ $

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FA /Workbook Page 20

PRETTY FACE BEAUTY SALON

STATEMENT OF FINANCIAL INCOME STATEMENT FOR THE YEAR Draft CASH FLOW STATEMENT FOR THE
POSITIONAS AT 31 Dec 2023 ENDED 31 DEC 2023 YEAR ENDED 31 DEC 2023
Workings Workings $ Workings $
ASSETS $ Revenue Receipts
Non Current Assets Service Revenue 9100 FA Capital 12000
Furniture 2050 Service Revenue 5600 OA Service Revenue 9100
Equipment 3180 Discount Received 20 FA Bank loan 1000
Aircon 1660 14720 OA Collection from A/R 2800
6890 Expenses IA Sale of equipment 180
Current Assets Rent exp -1200 OA Collection from A/R 400
Supplies 40 Elect exp -600 Total Receipts 25480
Accounts Receivable 2170 Staff salaries -2100 Payments
Bank 10670 Advert exp. -1900 IA Furniture -2500
12880 License fees -300 IA Equipment -4000
TOTAL 19770 Advert exp -600 OA Supplies -600
Temp staff -700 OA Rent exp -1200
LIABILITY Bad debts -200 OA Elect exp -600
Bank Loan 1000 Loss on sale -120 OA Staff salaries -2100
Accounts Payable 3500 Dep exp -1110 OA Advert exp. -1900
4500 Discount allowed -30 OA Licence fees -300
OE Supplies exp. -1360 OA Payment to suppliers -480
Capital 10770 -10220 FA Drawings -800
Retained Profit 4500 FA Drawings -330
15270 Profit 4500 Total Payments -14810
TOTAL 19770 Net change in cash balance 10670
Balance at start of the year 0
Balance at end of the year 10670

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FA /Workbook Page 21

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DEC 2023 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DEC 2023
Workings $ Workings $
Operating activities (Direct Method) Operating activities (Indirect Method)
Service Revenue 9100 Net profit 4500
Collection from A/R 2800 Adjustments for non cash events
Collection from A/R 400
Supplies -600
Rent exp -1200
Elect exp -600
Staff salaries -2100
Advert exp. -1900
Licence fees -300
Payment to suppliers -480
Net CF provided by / (used in) OA 5120 Net CF provided by / (used in) OA 5120
Investing activities Investing activities
Sale of equipment 180 Sale of equipment 180
Furniture + Equipment -6500 Furniture + Equipment -6500
Net CF provided by / (used in) IA -6320 Net CF provided by / (used in) IA -6320
Financing activities Financing activities
Capital 12000 Capital 12000
Bank loan 1000 Bank loan 1000
Drawings (800+330) -1130 Drawings (800+330) -1130
Net CF provided by / (used in) FA 11870 Net CF provided by / (used in) FA 11870
Net change in cash balance 10670 Net change in cash balance 10670
Balance at start of the year 0 Balance at start of the year 0
Balance at end of the year 10670 Balance at end of the year 10670

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FA /Workbook Page 22

DEBIT or CREDIT Decision Flow Chart

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FA /Workbook Page 23

Or,
Debit Credit
Asset Increase Decrease
Liability & Owners Equity Decrease Increase

Or expanded version,
Debit Credit
Asset & Expenses Increase Decrease
Liability, Capital, Revenue Decrease Increase

C Asset,
Expenses D
R E
E B
D Liability I
I Capital
Revenue T
T

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FA /Workbook Page 24

Question Hot & Spicy Food was started by Mr. Hugo N Fry on Jan 1, 2023.

Ref. Summary of Transactions for the year 2023.

1 Started business with $2000 in the business bank account.

2 Purchased furniture for $500 & equipment for $400. Paid by check.

3 Purchased supplies worth $160 for check. Purchased supplies worth $40 on credit from Clean Supplies.

4 Paid by check; rental expense $120, electricity exp. $60, staff salaries $210, Advertising exp. $190, license fees $30.

5 Collection for services rendered $900. Billed for services rendered on credit $600 to various customers.

6 Other amounts owed for advertising $60.

7 Received a bank loan $1000.

8 Check received from Receivables $280. Bad debts from Receivables $20.

9 Owner withdrew for personal use $80 from bank. The owner also paid from business funds $30 for personal expenses.

10 Depreciation expense on furniture is $40 equipment is $50.

11 Supplies used during the year $190.

Required;
1. Record the above transactions in the work sheet showing format of accounting equation.
2. Prepare the three year end financial reports.

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FA /Workbook Page 25

HOT & SPICY

ASSETS = LIABILITY + OE
Retained
REF Bank Furn Equip Supplies A/R = B Loan A/P CAPITAL Profit Profit
R ( E) Details

BAL

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FA /Workbook Page 26

HOT & SPICY

STATEMENT OF FINANCIAL POSITION INCOME STATEMENT FOR THE CASH FLOW STATEMENT FOR THE
/ BALANCE SHEET AS AT 31 Dec 2023 YEAR ENDED 31 DEC 2023 YEAR ENDED 31 DEC 2023
$ $ $

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FA /Workbook Page 27

HOT & SPICY

ASSETS = LIABILITY + OE
Retained
REF Bank Furn Equip Supplies A/R = B Loan A/P CAPITAL Profit PROFIT
1 2000 = 2000 R ( E) Details

2 -900 500 400 =

3 -160 200 = 40

4 -120 = -120 Rental expense

-60 = -60 Electricity expense
-210 = -210 Staff salaries
-190 = -190 Advertising expense
-30 = -30 License fees

5 900 600 = 1500 Service revenue

6 = 60 -60 Advertising expense

7 1000 = 1000

8 280 -300 = -20 Bad debt expense

9 -110 = -110

10 -40 -50 = -90 Depreciation exp

11 -190 = -190 Supplies expense

530 Net Profit
530 -530 Transfer
BAL 2400 460 350 10 300 = 1000 100 1890 530 0
3520 = 3520

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FA /Workbook Page 28

HOT & SPICY

STATEMENT OF FINANCIAL INCOME STATEMENT FOR Draft CASH FLOW STATEMENT FOR
POSITION AS AT 31 DEC 2023 THE YEAR ENDED 31 DEC 2023 THE YEAR ENDED 31 DEC 2023
ASSETS $ Revenue $ $
Service Revenue 1500 Receipts
Furniture 460 Capital 2000
Equipment 350 Service Revenue 900
810 Expenses Bank loan 1000
Supplies 10 Rent exp -120 Collection from A/R 280
Accounts Receivable 300 Elect exp -60 Total Receipts 4180
Bank 2400 Staff salaries -210 Payments
2710 Advert exp. -190 Furniture -500
Licence fees -30 Equipment -400
TOTAL 3520 Advert exp -60 Supplies -160
Temp staff 0 Rent exp -120
LIABILITY Bad debts -20 Elect exp -60
Bank Loan 1000 Dep exp -90 Staff salaries -210
Accounts Payable 100 Supplies exp. -190 Advert exp. -190
1100 License fees -30
OE Drawings -110
Capital 1890
Retained Profit 530 Total Payments -1780
2420 Net change in cash balance 2400
TOTAL 3520 Profit 530 Balance at start of the year 0
Balance at end of the year 2400

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FA /Workbook Page 29

QUESTION Cat Care Services was started by Ms Hearty on Jan 1, 2023.

Ref Summary of Transactions for the year 2023.

.
1 Started business with $10000 in the business bank account.

2 Furniture bought for $2000. Paid by check.

3 Purchased air con system from Penguin Inc. for $1000 on credit.

4 Purchased supplies worth $800 for check. Purchased supplies worth $500 on credit from Panda Supplies.

5 Paid by check; rental expense $1000, electricity exp. $800, staff salaries $2200, Advertising exp. $1900, license
fees $300.

6 Collection for services rendered for immediate check $9500.

Billed for services rendered on credit $5500 to various customers.

7 Supplies bought on credit $2500. Other amounts owed for: advertising $900.

8 Check received from Receivables $2800. Bad debts from Receivables $200.

9 Depreciation expense on furniture is $400 and air con system $200.

10 Supplies on hand at the end $240. Use this information to compute supplies used.

Required;
1. Record the above transactions in the work sheet showing format of accounting equation.
2. Code them with debits and credits.
3. Prepare the year-end financial reports.

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FA /Workbook Page 30

ANSWER Cat Care – Work Sheet solutions

ASSETS = LIABILITY + OE
Retained Details
= CAPITAL Profit PROFIT
REF Bank Furni Aircon Supplies A/R = A/P R ( E)

BAL

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FA /Workbook Page 31

ANSWER Cat Care – Work Sheet solutions

ASSETS = LIABILITY + OE
Retained
= CAPITAL Profit PROFIT
REF Bank Furni Aircon Supplies A/R = A/P R (E ) Details
1 10000 = 10000
2 -2000 2000 =
3 1000 = 1000
4 -800 800 =
500 = 500
5 -1000 = -1000 Rental expense
-800 = -800 Electricity exp
-2200 = -2200 Staff salaries
-1900 = -1900 Advertising exp.
-300 = -300 License fees
=
6 9500 = 9500 Service revenue
5500 = 5500 Service revenue
=
7 2500 = 2500
= 900 -900 Advertising exp
8 2800 -2800 =
-200 = -200 Bad debts exp
9 -400 -200 = -600 Depreciation exp
10 -3560 = -3560 Supplied used
= 3540 Net profit
= 3540 -3540 Transfer
BAL 13300 1600 800 240 2500 = 4900 10000 3540 0
18440 = 18440

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FA /Workbook Page 32

ANSWER Cat Care

STATEMENT OF FINANCIAL INCOME STATEMENT FOR THE CASH FLOW STATEMENT FOR THE
POSITIONAS AT 31-Dec-2023 YEAR ENDED 31 DEC 2023 YEAR ENDED 31 DEC 2023
$ $ $

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FA /Workbook Page 33

i GyM
i GyM was started by Mr Shaw Oaf on Jan 1, 2023. Summary of Transactions for the year 2023.

1 Started business with $50000 in the business bank account.

2 Purchased furniture for $20000. Paid by check.
3 Purchased equipment for $40000. Paid by check
4 Purchased air con system from A/P for $30000 on credit.
5 Purchased supplies worth $6000 for check. Purchased supplies worth $8000 on credit from A/P.
6 Paid by check operating expense $30000.
7 Collection for services rendered $50000.
8 Billed for services rendered on credit $40000 to various customers.
9 Other amounts owed for: salary for visiting trainers $3000.
10 Received a bank loan $10000.
11 Check paid for supplies bought previously on credit for $2000.
12 Check received from AR $22000.
13 The owner also paid from business funds $9000 for personal expenses.
14 Equipment worth $3000 was considered celebrity memorabilia and sold for $5000 by check.
15 Depreciation expense on furniture is $2000 equipment is $4000 and air con system $3000.
Required;
1. Record the above transactions in the work sheet showing format of accounting equation.
2. Code the figures in the worksheet as Dr (Debit) or Cr (Credit).
3. Highlight the figures in the worksheet that will appear in the three financial statements.

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 FA /Workbook Page 34

i GYM
Assets = Liabilities Owners Equity
Retained
Ref Bank Furn Equip Aircon Supplies A/R = Bank Loan A/P Capital Profit Profits
R ( E) Details

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FA /Workbook Page 35

i GYM
Liabilitie
Assets = s + Owners Equity
Ban Fur Equi Airco A/ Bank A/ Retaine
k n p n Supplies R = Loan P Capital d Profit Profits Details
1 50 = 50 Capital brought in
2 -20 20 = Furniture
3 -40 40 = Equip
4 30 = 30 Aircon
5 -6 14 = 8 Supplies
6 -30 = -30 Operating exp
7 50 = 50 Collection for service rendered
8 40 = 40 Billed for service rendered
9 = 3 -3 Salaries for visiting trainers
10 10 = 10 Bank Loan
11 -2 = -2 Paid for supplies bought previously
12 22 -22 = Check rec from AR
13 -9 = -9 Withdraw capital from bank
14 5 -3 = 2 Equipment sold at profit
15 -2 -4 -3 = -9 Dep exp
50 Net profit
50 -50 Transfer
Bal 30 18 33 27 14 18 = 10 39 41 50 0
140 = 140

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FA /Workbook Page 36

eGo
Financial balances for the car hire business of Mr E Go on 31 October 2023 are provided below in a table in accounting equation form similar to the chapter
illustrations.

ASSETS = LIABILITIES + Owners Equity

Cash AR Equip MV Supplies = Accounts Loan + Capital Retained Profit
Trans Bank Debtors = Payable + Profit R ( E) Details
Bal 11000 15000 1500 94000 0 = 3500 12000 + 100000 6000

During November, the business of E Go entered into the following transactions:

1. Collected $8000 of the accounts receivable.
2. Paid $2000 of the accounts payable.
3. Purchased another vehicle for $48 000. Paid $5000 in cash and signed a loan agreement for the balance.
4. Billed customers for services performed, $10 500.
5. Fuel supplies purchased on credit, $3750.
6. Paid expenses in cash, $4250 (wages, $2400; car cleaning $1200; advertising, $650).
7. Mr E Go withdrew $2000 for personal use.
8. Paid parking fines of $300.

Required
A. List the 31 October balances for assets, liabilities and equity in table form as shown below.
B. Record the effects of each transaction. Show the total of each column after recording each transaction.
C. Prepare an income statement, a statement of changes in equity and a statement of cash flows for the month ended 30 Nov 2023, and a balance sheet
(account format) as at 30 Nov 2023.

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FA /Workbook Page 37

ASSETS = LIABILITIES + Owners Equity

Cash AR Equip MV Supplies = Accounts Loan + Capital Retained Profit
Trans Bank Receivables = Payable + Profit R ( E) Details
Bal 11000 15000 1500 94000 0 = 3500 12000 + 100000 6000
1 =
2
3
4
5
6

7
8

BAL

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FA /Workbook Page 38

ASSETS = LIABILITIES + Owners Equity

Cash AR Equip MV Supplies = Accounts Loan + Capital Retained Profit
Trans Bank Receivables = Payable + Profit R ( E) Details
Bal 11000 15000 1500 94000 0 = 3500 12000 + 100000 6000
1 8000 -8000 =
2 -2000 = -2000
3 -5000 48000 = 43000
4 10500 = 10500 Service Revenue
5 3750 = 3750
6 -2400 = -2400 Wage exp
-1200 = -1200 Cleaning exp
-650 = -650 Advert exp
7 -2000 = -2000
8 -300 = -300 Parking fine
= 5950 Net Profit
= 5950 -5950 Transfer
BAL 5450 17500 1500 142000 3750 = 5250 55000 0 98000 11950 0
170200 = 170200

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