Question

name, Double-Entry Bookkeeping The transactions of Wheels Repair Shop for January 2019 are shown below: January 3-Debby Star opened a bank account under the name of her new business and deposited £30,000 in cash. January 4 - She rented a temporary shop and paid £300 for the January rent, issued cheque. January 5-Rented automotive tools and equipment until the firm could purchase its own. Rent in the amount of £80 was paid for January, issued cheque. January 5 - Purchased motorcycle parts and supplies described on invoice from the Southern Supply Company for £400 on account. January 10- Purchased land as a prospective building site for £10,000. Paid £4,000 in cash and issued a one-year note payable for the balance. January 12 - Made repairs on George Shipman's motorcycle for £40. Shipman asked that a charge account be opened in his name. He promised to settle the account within 30 days. This arrangement was authorized by service manager. January 26-Made repairs on Jay Munson's motorcycle for £180. A charge account was opened in his January 29- Purchased motorcycle parts and supplies from Delco Supply House for £250 on account January 29 - Paid the Southern Supply £300 on account (cheque) January 31 - Paid electricity and water bills of £80 for January January 31 - Paid £1,700 in salaries for the month January 31 - Made motorcycle repairs for various cash customers for £4,800 January 31 - Debby Star withdrew £300 in cash in anticipation that at least as much income had been January 31 - Purchased automotive tools and equipment for cash £4,000. The list price was 5,000 January 31 - Paid a premium of £600 on a 12 months insurance policy, it becomes effective on February 1, 2019. January 31 - Received a cheque for £10 from George Shipman. Required: (a) Analyze the transactions using extended accounting equation formula (b) Journalize the transactions (c) Post to the ledger (d) Prepare a trial balance sheet/ footing earned a) Extended accounting equation formula:

Answer 1

Answer-

a)	Accounting Equation formula , Assets = Liabilities + Stockholder's Equity + Net Income
	Assets		Liabilities + Stockholder's Equity + Net Income
	Cash	Accounts Receivable	Prepaid Insurance	Supplies	Automotive tools	Land		Accounts Payable	Notes Payable	Stockholders Equity	Retained Earnings	Revenue- Expense	Expense Type
1	30000									30000
2	-300												300	Rent
3	-80												80	Rent
4				400				400
5	-4000					10000			6000
6		40										40
7		180										180
8				250				250
9	-300							300
10	-80												80	Electricity and water bills
11	-1700												1700	Salaries
12	4800											4800
13	-300										-300
14	-4000				4000
15	-600		550										50	Insurance
16	10	-10
b)
Date	Transactions	Debit	Credit
3.01.2019	Cash	30000
	To Debby Star, Capital		30000
	(Being bank account opened by investing capital)
04.01.2019	Rent Expense	300
	To Cash		300
	(Being shop rent expense paid)
05.01.2019	Automobile tools and Equipment Rent	80
	To Cash		80
	(Being automobile tools and equipment rent paid)
05.01.2019	Purchases	400
	To Southern Supply Company		400
	(Being purchase of motorcycle parts and supplies on account)
10.01.2019	Land	10000
	To Cash		4000
	To Note payable		6000
	(Being purchase of land as a prospective building)
12.01.2019	George Shipman's motorcycle	40
	To Service revenue		40
	(Being repairs services provided on account)
26.01.2019	Jay Munson's	180
	To Service Revenue		180
	(Being repairs services provided on account)
29.01.2019	Purchases	250
	To Delco Supply House		250
	(Being purchase of motorcycle parts and supplies on account)
29.01.2019	Southern Supply Company	300
	To Cash		300
	(Being payment made to southern supply)
31.01.2019	Electricity and water bills	80
	To Cash		80
	(Being electricity and water bills paid)
31.01.2019	Salaries Expense	1700
	To Cash		1700
	(Being Salaries Expense paid)
31.01.2019	Cash	4800
	To Service Revenue		4800
	(Being motorcycle repairs service provided for cash)
31.01.2019	Drawings	300
	To Cash		300
	(Being cash withdrawan by Debby Star)
31.01.2019	Automotive tools and equipment	4000
	To Cash		4000
	(Being automotive tools and equipment purchased)
31.01.2019	Insurance Expense	50
	Prepaid Insurance	550
	To Cash		600
	(Being insurance premium paid)
31.01.2019	Cash	10
	To George Shipman		10
	(Being cash received from George Shipman)
c)	Cash
	Particulars	Debit	Particulars	Credit
	Debby Star, Capital	30000	Rent Expense	300
	Service Revenue	4800	Rent Expense	80
	Accounts Receivable	10	Land	4000
			Accounts Payable	300
			Electricity and water bills	80
			Salaries	1700
			Drawings	300
			Automobile tools and equipment	4000
			Insurance	600
			Accounts Payable	10
			Bal	23440
		34810		34810
	Debby Star, Capital
	Particulars	Debit	Particulars	Credit
	Bal	30000	Cash	30000
		30000		30000
	Rent Expense
	Particulars	Debit	Particulars	Credit
	Cash	300
	Cash	80	Bal	380
		380		380
	Purchases
	Particulars	Debit	Particulars	Credit
	Accounts Payable	400
	Accounts Payable	250	Bal	650
		650		650
	Accounts Payable
	Particulars	Debit	Particulars	Credit
	Cash	300	Purchases	400
	Cash	10	Purchases	250
	Bal	340
		650		650
	Land
		Debit	Credit	Balance
	Cash	10000	Bal	10000
		10000		10000
	Notes Payable
		Debit	Credit	Balance
	Balance	6000	Land	6000
		6000		6000
	Service Revenue
		Debit	Credit	Balance
			Accounts Receivable	40
			Accounts Receivable	180
	Balance	5020	Cash	4800
		5020		5020
	Accounts Receivable
		Debit		Credit
	Service Revenue	40	Cash	10
	Service Revenue	180	Balance	210
		220		220
	Electricity and water bills
		Debit	Credit	Balance
	Cash	80
			Balance	80
		80		80
	Salaries
		Debit	Credit	Balance
	Cash	1700
			Balance	1700
		1700		1700
	Drawings
		Debit	Credit	Balance
	Cash	300
			Balance	300
		300		300
	Automobile tools and equipment
		Debit	Credit	Balance
	Cash	4000
			Balance	4000
		4000		4000
	Insurance
		Debit	Credit	Balance
	Cash	50
			Balance	50
		50		50
	Prepaid Insurance
		Debit	Credit	Balance
	Cash	550
			Balance	550
		550		550
d)	WHEELS REPAIR SHOP
	TRIAL BALANCE
	As on 31st January 2019
	Accounts	Debit	Credit
	Cash	23440
	Debby Star, Capital		30000
	Rent Expense	380
	Purchases	650
	Accounts Payable		340
	Land	10000
	Notes Payable		6000
	Service Revenue		5020
	Accounts Receivable	210
	Electricity and Water Bills	80
	Salaries	1700
	Drawings	300
	Automobile Tools and Equipment	4000
	Insurance	50
	Prepaid Insurance	550
	Total	41360	41360