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Thread: MGT101 Financial Accounting Assignment No.2 Ideal Solution Spring Fall 2014

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    MGT101 Financial Accounting Assignment No.2 Ideal Solution Spring Fall 2014

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    MGT101 Financial Accounting Assignment No.2 Ideal Solution Spring Fall 2014

    Assignment Questions !!

    TOPIC TO BE TESTED:
    • Recognizing changes in accounting equation and its effect on financial statements
    LEARNING OBJECTIVES:
    • To understand, recognize and record changes in the accounting equation due to
    the transaction activities
     To prepare financial statements i.e. Balance Sheet
    QUESTION
    Following data is available for a business concern on June 30, 2013:
    Items Rs.
    Accounts Payable 25,000
    Cash 45,000
    Factory Building 250,000
    Equipment 74,000
    Contributed Capital 85,000
    Notes Payable 2,500
    Land 222,000
    Supplies 4,500
    Retained Earnings 483,000
    SEMESTER SPRING 2014
    FINANCIAL ACCOUNTING (MGT101)
    ASSIGNMENT # 02
    DUE DATE: 22nd July 2014 MARKS: 10 Further activities have been carried in July 2013:
    1. Received Rs.300,000 in cash against 3,000 shares
    2. Local bank has approved a loan worth Rs.15,000 that is payable on June 30, 2014
    3. Paid Rs.33,000 in cash and signed a one-year note for the balance against purchase of factory
    building worth Rs.83,000
    4. An equipment has been purchased on cash that costs Rs.45,000
    5. Purchased supplies on account worth Rs.45,000


    Required:
    1. Analyze each transaction of July in order to determine its effect on the accounting equation.
    2. Prepare T- Accounts and find ending balance
    3. Prepare Balance Sheet using T account format at July 31, 2013
    For requirement no.1 follow the format provided below in example.
    Example: Purchased a piece of land on account that costs Rs.50,000
    Assets = Liabilities + Shareholders’ Equity
    Assets Liabilities Shareholders’ Equity
    Land Accounts
    Payable
    + 50,000 + 50,000

  2. #2
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    Format of balance sheet :
    Format
    The balance sheet can be reported in two different formats: account form and report form. The account form consists of two columns displaying assets on the left column of the report and liabilities and equity on the right column. You can think of this like debits and credits. The debit accounts are displayed on the left and credit accounts are on the right.

    The report form, on the other hand, only has one column. This form is more of a traditional report that is issued by companies. Assets are always present first followed by liabilities and equity.

    In both formats, assets are categorized into current and long-term assets. Current assets consist of resources that will be used in the current year, while long-term assets are resources lasting longer than one year.

    Liabilities are also separated into current and long-term categories.

    Like all financial statements, the balance sheet has a heading that display's the company name, title of the statement and the time period of the report.

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    Balance sheet example:

    balancesheetexample.jpg

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    Further activities have been carried in July 2013:

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    1. Received Rs.300, 000 in cash against 3,000 shares

    2. Local bank has approved a loan worth Rs.15, 000 that is payable on June 30, 2014

    3. Paid Rs.33, 000 in cash and signed a one-year note for the balance against purchase of factory

    Building worth Rs.83, 000

    4. An equipment has been purchased on cash that costs Rs.45, 000

    5. Purchased supplies on account worth Rs.45, 000

    Required:

    1. Analyze each transaction of July in order to determine its effect on the accounting equation.

    2. Prepare T- Accounts and find ending balance

    3. Prepare Balance Sheet using T account format at July 31, 2013

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