BASIC ACCOUNTING was established as a business on January 1, 20x1. It and car pa
ID: 2328292 • Letter: B
Question
BASIC ACCOUNTING was established as a business on January 1, 20x1. It and car parts and provides repair/cleaning services for Ga and supilerhe following are the transons that happened for its first Dahon Car customers' cars. their year in business: Initial cash investment by the owner Mr. Jobs, Pablo, worth P2,000000. . Bought various supplies through cash which will be used evenly for 1 February 1 Recorded through expense method. year, worth P48,000. Purchased car parts on credit worth P230,000. Shipping costs P20,000. with terms FOB Shipping Point, Freight Prepaid. March 15: Purchased car parts on credit, amounting P180,000. However, some of were damaged and returned to the supplier, worth P30,000. the car parts March 31: Availed new space, and paid rent in advance, worth P100,000 for 10 months. Recorded through asset method. March 31: Bought equipment and provided promisory note as payment, with acquisition cost of P200,000, and salvage value of P20,000. The equipment can be used for 5 years. The promisory note is an interest-bearing note with 12% rate of interest June 30: Sold various car parts on credit for P200.000, with 10% mark up. July 15: Customers returned some of our products worth P20,000 sales price, which are in good condition. August 30: Collected half of the receivables. September 1: Engaged a repairing service contract with a customer, worth P180,000 which will last for 6 months of service, cash was collected in advance. The entire amount was credited initially as income. October 1: Engaged in a 1-year cleaning service contract with a customer, worth P120,000, cash collected in advance. The entire amount was credited initially as income. December 31: Incurred various Service Expenses amounting to P100,000. Received Utilities Bills in relation to operations with a due amount of P150,000.Explanation / Answer
Dahon Car Parts and Services Date Account Title and explanations Debit Credit Jan-01 Cash 2000000 Mr. Jobs, Pablo, Capital 2000000 To record the initial cash investment by owner Feb-01 Supplies 48000 Cash 48000 To record the supplies expenses Mar-01 Inventory of car parts 250000 Accounts payable 250000 To record the purchase of car parts and shipping costs Mar-15 Inventory of car parts 180000 Accounts payable 180000 To record the purchase of car parts Accounts payable 30000 Inventory of car parts 30000 To record the purchase returns Mar-31 Rent expenses 100000 Cash 100000 To record the rent for remaining 9 months of the year and prepaid for one month Mar-31 Equipment 200000 Promisory Note 200000 To record the purchase of equipment on promisory note Jun-30 Accounts Receivable 200000 Revenue from sales 200000 Cost of goods sold 181818.2 Inventory of car parts 181818.2 To record the revenue from sales Jul-15 Revenue from sales 20000 Accounts Receivable 20000 Inventory of car parts 18181.82 Cost of goods sold 18181.82 To record the sales return in good condition Aug-30 Cash 90000 Accounts Receivable 90000 To record the receipts from receivables Sep-01 Cash 180000 Revenue from services 180000 To record revenue from repairing services Oct-01 Cash 120000 Revenue from Services 120000 To record the revenue from services and unearned revenue Dec-31 Service Expenses 100000 Cash 100000 Utility Expenses 150000 Utility expenses payable 150000 To record service expenses and utility expenses Adjustment entries Dec-31 Supplies 4000 Supplies expenses 4000 To record the stock of supplies(=one month's stock) Dec-31 Prepaid Rent 10000 Rent expenses 10000 To reocrd the one month's prepaid rent Dec-31 Depreciation Expense 27000 Accumulated depreication 27000 To record the depreciation expense for the year Dec-31 Interest Expense 18000 Interest Expense payable 18000 To record outstanding interest on promisory note Dec-31 Revenue from Services 60000 Unearned Revenue 60000 Revenue from Services 90000 Unearned Revenue 90000 To record the unearned revenue
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