Principles of Accounting Problems and Solutions
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Question 2
Dr. Guru opened a dental clinic on August 2016. The business transactions for August are shown below:
1. Dr. Guru invested 280,000 cash in the business in exchange for shares of capital stock.
2. Land and building was purchased for 400,000. Of this amount 60,000 applied to land and 340,000 to the building. A cash payment of 80,000 was made and a note payable was issued for the remaining balance.
3. Medical instruments were purchased for 75,000.
4. Office equipment and furniture’s were purchased for 25,000. Of this amount 10,000 paid in cash and remaining balance in 15 days.
5. Office supplies were purchased for the 4,200.
6. Dr. Guru billed patients 13,000 for services provided. Of this amount, 1000 was received in cash and 12,000 were billed on account.
7. Paid employees 2200 for salaries earned in august.
8. Received a 500 payment on the 12,000 account receivable.
Requirement
Prepare Journal Entries for each transaction for August 2016.
Ok payment
1 cash 280,000
capital 280,000
2. land 60,000
building 340,000
cash 80,000
account payable 320,000
3 medical instrument 75,000
cash 75,000
4. equipment & supplies 25,000
cash 10,000
account payable 15,000
5 supplies 4,200
cash 4,200
6 account receivable 12,000
cash 1,000
service revenue 13,000
7 salaries expense 2,200
cash 2,200
8 cash 500
account receivable 500
Illustrated the effects of Overnight’s January transactions on the Accounting Overnight’s transactions during January were as follows:
Jan. 20
Jan. 21
Jan. 22
Jan. 23
Jan. 24
Michael McBryan started the business by depositing $80,000 received from the sale of capital stock in a company bank account.
Purchased land for $52,000, paying cash.
Purchased a building for $36,000, paying $6,000 in cash and issuing a note payable for the remaining $30,000.
Purchased tools and equipment on account, $13,800.
Sold some of the tools at a price equal to their cost, $1,800, collectible within 45 days.
Jan. 26 Received $600 in partial collection of the account receivable from the
sale of tools.
Paid $6,800 in partial payment of an account payable.
Received $2,200 of sales revenue in cash.
Jan. 27
Jan. 31
Jan. 31 Paid $1,400 of operating expenses in cash-$200 for utilities and for wages.
Use accounting equation to show their effect on his Assets, Liabilities and Capital?
Koki Limited which manufactures part M – 6 for use in its production cycle hasthe following
costs per unitfor production of 25,000 units.
N
Directmaterials
5
Direct labour
20
Manufacturing overhead
24
49
It has been established that 66 2/3% of the overhead is fixed. Sahara Limited has offered to
sell 25,000 units of part M – 6 to Koki Ltd, for N45 per unit. If Koki Ltd., accepts Sahara’s
offer, some of the facilities presently used to manufacture M – 6 could be rented to a third
party at an annualrent of N65,000.
Additionally, N6 per unit of the fixed overhead costs applied to part M – 6 would be totally
eliminated. The managing director of Koki Ltd, has called on you to advise on whether he
should accept Sahara’s offer.
(b)
State factors other than the relevant costs above which would influence your decision
to accept orreject Sahara’s offer.
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