Question

Hermosa Senorita Nourah and Sarah, former CBA students, had saved some cash and decided to start their own business. They surveyed the market to find what business suits their budget, and what business they know the best. Since they have some experience in makeup and beauty. They decided to open a beauty salon called Hermosa Señorita. The salon will have with a monthly accounting cycle. They have started their business on Jan 18, 2019. The following are some events that happened in 2019. 1. Jan 1. Nourah and Sarah invested 50,000 SAR in cash and 10,000 SAR in hairdryers, straighteners, and other hair equipment in exchange for 60,000 SAR ordinary shares in Hermosa Señorita. 2. Jan 1. Hermosa Señorita rented a place that cost 12,000 SAR annually to start the business. The full payment due in Dec. 31, 2019. 3. Jan 2. Hermosa Señorita paid 1200 SAR for a one-year insurance policy that will expire Dec. 31, 2019 4. Jan 3. Hermosa Señorita purchased some makeup, massage oil, and Nile polish from Sephora signing 5 months note payable in the amount of 8,000 SAR. The note required Hermosa Señorita to pay interest at an annual rate of 15%. 5. Jan 7. Hermosa Señorita haired 4 ladies on the positions starting Jan 8, 2019. Each employee agreement set the salary to be 600 SAR for a six-day work week (the salon closes on Fridays), and the salaries will be paid on the eighth day of every month. 6. Jan 12. Hermosa Señorita received total of 15,000 SAR for provided services. 7. Jan 13. Hermosa Señorita received 2,500 SAR in cash from Hind for a reservation of a makeup service to be provided on Jan 17, 2019. 8. Jan 14. Hermosa Señorita provided some services for 3000 SAR to Amal (Nourah best friend) and she agreed to pay the amount due later. 9. Jan 15. Hermosa Señorita received 1000 SAR in cash for a reservation of a massage service. The service should be provided on Feb 2, 2019. 10. Jan 17. Hermosa Señorita provided the makeup service to Hind (she had a paid reservation on Jan 13) 11. Jan 30. Hermosa Señorita paid 500 SAR utilities expenses. 12. Jan 30. Hermosa Señorita board of directors declared and paid 500 SAR cash dividends to shareholders. Additional information: makeup, massage oil, and Nile polish on hand 6000 SAR. • The 4 ladies worked 21 days in Jan. • The accountant updated the rent and insurance . Depreciation is 4000 SAR

Requirement:

Ledger Accounts

Answer 1

Cash A/C Cr Date Particulars 1-Jan To Capital A/C To Ordinary Shares 12-Jan To Sale of services 13-Jan To Unearned revenue (Hind) 15-Jan To Unearned revenue 60,000 60,000 15,000 2,500 1,000 Date Particulars 1-Jan By Hair Dryer A/C 1-Jan By Prepaid Rent A/C 2-Jan By Prepaid Insurance A/C 30-Jan By Utilities Expenses A/C 30-Jan By Dividend paid A/C 31-Jan By Balance c/f 10,000 12,000 1,200 500 500 114,300 138,500 138,500 Capital A/C Cr Date Particulars 31-Jan To Balance c/f Date Particulars 1-Jan By Cash A/C 60,000 60,000 60,000 60,000 Date Particulars 1-Jan To Cash A/C Hair Dryer A/C Dr 60,000 Date Particulars 31-Jan By Depreciation A/c 31-Jan By Balance c/f 4,000 56,000 60,000 60,000 Date Particulars 31-Jan To Balance c/f Ordinary Shares A/C Dr Date Particulars 50,000 1-Jan By Cash A/C 50,000 50,000 50,000 Date Particulars 1-Jan To Cash A/c Prepaid rent A/C Dr Date Particulars 12,000 31-Jan By Rent A/c 31-Jan To Balance c/f 12,000 1,000 11,000 12,000 Rent A/C Dr 1,000 Date Particulars 31-Dec To Prepaid Rent A/c Cr Date Particulars 31-Dec By Profit and Loss A/C 1,000 1,000 1,000 Date Particulars 2-Jan To Cash Alc Prepaid Insurance A/C Dr Date Particulars 1,200 31-Jan By Insurance Expense A/C 31 Jan To Balance c/ 1,200 1,100 1,200 Sensitivity: Internal (C3)

Date Particulars 2-Jan To Cash Alc Insurance Expense Dr Date Particulars 100 31-Dec By Profit and Loss A/C 100 100 Date Particulars 3-Jan To 15% Notes Payable A/C Makeup, Massage Oil, Nail Polish A/C Dr Date Particulars 8,000 31-Jan By Profit and Loss A/C 31-Jan By Balance c/f 2.000 6,000 8,000 8.000 Date Particulars 31-Jan To Balance c/f 15% Notes Payable A/C Dr Date Particulars 6,000 3-Jan By Makeup, Massage Oil, Nail Polish A/C 6,000 6,000 6,000 Date Particulars 31-Jan To Salaries Payable A/ C Salaries A/C Dr 8,400 Date Particulars 31-Jan By Profit and Loss A/C I 8.400 8,400 8,400 Date Particulars 31-Jan To Balance c/f Dr Salaries Payable A/C Date Particulars 8,400 31-Jan By Salaries A/c 8.400 8,400 8,400 Cr Date Particulars 31-Jan To Profit and Loss A/C Sale of Services A/C Dr Date Particulars 20,500 12-Jan By Cash A/C 14-Jan By Amal (Debtors) 17-Jan By Unearned revenue 15,000 3,000 2,500 20,500 20,500 Date Particulars 17-Jan To Sale of Services A/C 31-Jan To Balance c/f Unearned revenue A/C Dr Date Particulars 2,500 13-Jan By Cash A/C 1,000 15-Jan By Cash A/C 3,500 2,500 1,000 3,500 Date Particulars 14-Jan To Sale of Services A/c Amal (Debtors) Dr Date Particulars 1 3,000 31-Jan By Balance c/f 3,000 Sensitivity: Internal (C3)

3,000 3,000 Date Particulars 30-Jan To Cash Alc Utilities Expenses A/C Dr Date Particulars 500 31-Jan By Profit and Loss A/C 500 Date Particulars 30-Jan To Cash A/C Dividend Paid A/C Dr Date Particulars 500 31-Jan By Retained Earnings A/C 500 500 Date Particulars 31-Jan To Hair Dryer A/C Depreciation A/C Dr Date Particulars 4,000 31-Jan By Profit and Loss A/C 4,000 4,000 20,500 Profit and Loss A/C Date Particulars Dr 1 Date Particulars 31-Jan To Rent A/C 1,000 31-Jan By Sale of Services 31-Jan To Insurance A/C 100 31-Jan To Makeup, Massage Oil, Nail 2,000 Polish A/C 31-Jan To Salaries A/C 8,400 31-Jan To Utilities A/C 500 31-Jan To Depreciation A/C 4,000 31-Jan To Balance c/f 4,500 20,500 20,500 Sensitivity: Internal (C3)