Question

The Electronics Appliance Corporation was organized on September 1 The following transactions occurred during the month of September:

(1) The firm issues 4/000 no-par-value common shares for $12 cash per share on September 1
(2) The firm's lawyer is given 600 no-par-value common shares on September 2 in payment for legal services rendered in the organization of the corporation. The bill for the services is $7,200.
(3) A factory building is leased for the three years beginning October 1. Monthly rental payments are $5,000. Two months' rent is paid in advance on September 5.
(4) Raw materials are purchased on account for $6,100 on September 12.
(5) A cheque for S900 is received on September 15 from a customer as a deposit on a special order for equipment that Electronics plans to manufacture. The contract price is $4,800.
(6) Office equipment with a list price of $950 is acquired on September 20. After deducting a discount of $25 for prompt payment, a cheque is issued in full payment.
(7) The company hires three employees to begin work on October 1. A cash advance of $200 is given to one of the employees on September 28.
(8) Factory equipment costing $27,500 is purchased on September 30. A cheque for $5,000 is issued, and a long-term mortgage liability is assumed for the balance.
(9) The labour costs of installing the new equipment in (8) are $450 and are paid in cash on September 30.

Required:

1. Prepare journal entries for each of the nine transactions
2. Set up T accounts and post the journal entries
3. Prepare a Balance Sheet for Electronics Appliance Corporation as at Sept. 30

Answer 1

a)

september	particulars	debit($)	credit($)
1	1)cash a/c dr	48000
	to equity share capital a/c(4000*12)		48000
2	2)legal service expense a/c dr	7200
	to equity share capital a/c		7200
5	3)advance rent a/c dr	10000
	to cash a/c		10000
12	4)purchase a/c dr	6100
	to sundry creditors		6100
	(being credit purchase)
15	5)bank a/c dr	900
	to advance for sale a/c		900
20	6)office equipment a/c dr	925
	to bank		925
28	7)advance salary a/c dr	200
	to cash a/c		200
30	8)factory equipment a/c dr	27500
	to bank		5000
	long term mortgage a/c		22500
30	9)installation charges a/c dr	450
	to cash		450

b)

		cash a/c
date	particulars	amount($)	date	particulars	amount($)
1.09	to equity share capital	48000	5.09	by advance rent	10000
			28.09	by advance salary	200
			30.09	by installation charges	450
			30.09	by balance c/d	37350
	total	48000		total	48000
		equity share capital a/c
date	particulars	amount($)	date	particulars	amount($)
			1.09	by cash	48000
30.09	to balance c/d	55200	2.06	by legal service expenses	7200
	total	55200		total	55200
		legal service expense a/c
date	particulars	amount($)	date	particulars	amount($)
2.09	to equity share capital	7200
			30.09	by balance c/d	7200
	total	7200
advance rent a/c
date	particulars	amount($)	date	particulars	amount($)
5.09	to cash	10000	30.09	by balance c/d	10000
	total	10000		total	10000
purchase a/c
date	particulars	amount($)	date	particulars	amount($)
12.09	to creditors a/c	6100	30.09	by balance c/d	6100
	total	6100		total	6100
creditors a/c
date	particulars	amount($)	date	particulars	amount($)
30.09	to balance c/d	6100	12.09	by purchase	6100
	total	6100		total	6100
bank a/c
date	particulars	amount($)	date	particulars	amount($)
15.09	to advance forsale a/c	900	20.09	by officeequipment	925
30.09	to bank overdraft	5025	30.09	by factory equipment	5000
	total	5925		total	5925
advance for sale a/c
date	particulars	amount($)	date	particulars	amount($)
30.09	to balance c/d	900	15.09	by bank	900
	total	900		total	900
office equipment a/c
date	particulars	amount($)	date	particulars	amount($)
20.09	to bank	925	30.09	by balance c/d	925
	total	925		total	925
advance salary
date	particulars	amount($)	date	particulars	amount($)
28.09	to cash	200	30.09	by balance c/d	200
	total	200		total	200
factory equipment
date	particulars	amount($)	date	particulars	amount($)
30.09	to bank	5000
30.09	to long termmortgage	22500	30.09	by balance c/d	27500
	total	27500		total	27500
long term mortgage a/c
date	particulars	amount($)	date	particulars	amount($)
30.09	to balance c/d	22500	30.09	by factory equipment	22500
	total	22500		total	22500
installation charges a/c
date	particulars	amount($)	date	particulars	amount($)
30.09	to cash	450	30.09	by balance c/d	450
	total	450		total	450

c)  

liabilities	amount	assets	amount
share capital	55200
creditors	6100	factory equipment	27500
bank od	5025	offfice equipment	925
advance for sale	900	cash	33750
long term mortgage	22500	advance rent	10000
		advance salary	200
		raw material	6100