Techworks Financial Statements and Transactions

Question:

Here are Techworks’ financial statements as of April 30, 2017. Techworks provides ICT services and sells ICT related products to the customers. Note that Techworks uses LIFO inventory costing method and Techworks is registered for GST.

The following events occur during May:

May 1. Techworks starts and completes twelve more Web sites and bills clients for $9,000.
May 2. Techworks purchases supplies worth $140 on account.
May 3. Techworks purchased a furniture for cash costing $1,200 for using up in the business. In relation this purchase, there is a $150 transportation cost.
May 4. Received a $4 000 invoice from the Australia Daily for advertising, due to be paid in within a month.
May 5. On account, Techworks purchases eighty-three keyboards for $122 each and ninety flash drives for $26 each from ICT Mart.
May 6. Techworks sells 98 keyboards for $14,700 and 100 of the flash drives for $3,000 cash.
May 8 Techworks collects $9,000 in accounts receivable.
May 10 Techworks pays its $500 rent.
May 12 Techworks pays off 2,000 of its accounts payable.
May 14 Techworks sells all of its investment in securities for $14 per security.
May 17 Techworks pays salaries to Chris $750 (net of $150 PAYGW) for his work.
May 19 Techworks pays off its salaries payable from April.
May 20 Techworks pays Leon and Nancy a salary of $2,800 (net of $590 PAYGW) each.
May 22 Techworks decides to use some of their excess cash and pay off the Bank Loan and
interest payable. No interest accrued on Bank Loan during May.
May 25 Paid invoice from the Australia Daily in full.
May 28 Paid ICT Mart in full and received $230 as discount for early payment.

Required:

1.Prepare journal entries for the above transactions and include a short explanation for each entry.
2.Post the journal entries to T-accounts.
3.Prepare an unadjusted trial balance for Techworks for May.

Answer:

Journal Entries:

In the Books of TechWorks
Journal Entries
Date	Particulars	Amount ($)	Amount ($)
01-May	Accounts Receivables A/c…………………Dr	9000
	To Sales A/c		9000
	(Being goods bills issued to supplier)

02-May	Purchase A/c ……………….Dr	140
	To Accounts Payable A/c		140
	(Being purchase of supplies on account)

03-May	Furniture A/c……………………………Dr	1200
	Carriage A/c………………………..……Dr	150
	To Cash……………A/c		1350
	(Being furniture purchase on cash and paid for transportation)

04-May	Advertising A/C………………….Dr	4000
	To Accounts Payable ……………..A/c		4000
	(Being invoice received from Australia Daily)

05-May	Purchase A/c ……………………..Dr	12466
	To Accounts Payable …………………A/c		12466
	(Being keyboards and flash drive purchased from ICT on account)

06-May	Cash A/c …………………………Dr	17700
	To Sales ……………….A/c		17700
	(Being keyboards and flash drive sold in cash)

08-May	Cash A/c……………………………………………Dr	9000
	To Accounts Receivables ……..A/c		9000
	(Being cash received)

10-May	Rent A/C …………………………..Dr	500
	To Cash ……………………..A/c		500
	(Being rent paid)

12-May	Accounts Payable A/C…………………….Dr	2000
	To Cash ………………………A/c		2000
	(Being accounts payable paid off)

14-May	Cash A/C ……………………………..Dr	3500
	To Investment Securities………………..A/c		3500
	(Being investment security sold @14 per security)

17-May	Salaries A/C……………………….Dr	750
	To Cash …………….. A/C		750
	(Being salary paid to Chris)

19-May	Salaries Expense A/c……………..Dr	100
	To Salaries Payable ……..A/c		100
	(Being salaries payable paid off)

20-May	Salaries A/C……………………….Dr	4000
	To Cash …………….. A/C		4000
	(Being salary paid to Leon and Nancy)

22-May	Bank Loan A/c………………..Dr	3000
	To Cash …………………A/c		3000
	(Being bank loans paid)

22-May	Interest Payable A/C……………….Dr	45
	To Cash …………………..A/c		45
	(Being interest paid)

25-May	Accounts Payable A/C………………..Dr	4000
	To Cash ……………………A/c		4000


28-May	Accounts payable A/c…………Dr	12466
	To Discount Received ………..A/c		230
	To Cash……………………….A/c		12236
	(Being full payment made to ICT and received discount)

T-Accounts:

Accounts receivable Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
01-May	To Sales A/c	9000	08-May	By Cash A/c	9000
		9000			9000




Sales Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
	To Balance C/d	26700	01-May	By Accounts Receivable A/c	9000
			06-May	By Cash A/c	17700

		26700			26700



Purchase Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
02-May	To Accounts Payable A/c	140		By Balance C/d	12606
05-May	To Accounts Payable A/c	12466
		12606			12606
		12606

Accounts Payable Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
12-May	To Cash A/c	2000	02-May	By Purchase A/c	140
25-May	To Cash A/c	4000	04-May	By Addvertising A/c	4000
28-May	To Cash A/c	12236	05-May	By Purchase A/c	12466
				By Balance C/d	1630
		18236			18236
		1630


Furniture Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
03-May	To Cash A/c	1200		By Balance C/d	1200
		1200			1200




Carriage Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
03-May	To Cash A/c	150		By Balance C/d	150
		150			150




Cash Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
06-May	To Sales A/c	17700	03-May	By Furniture A/C	1200
08-May	To Accounts Receivable A/c	9000	03-May	By Carriage A/c	150
			10-May	By Rent A/c	500
			12-May	By Accounts Payable A/c	2000
			14-May	By Investment A/c	3500
			17-May	By Salaries A/C	750
			20-May	By Salaries A/c	4000
			22-May	By Bank Loans A/c	3000
			22-May	By Interest Payable A/c	45
			25-May	By Accounts Payable A/c	4000
				By Balance C/d	7555
		26700			26700


Advertising Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
04-May	To Accounts Payable A/c	4000		By Balance C/d	4000
		4000			4000




Rent Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
10-May	To Cash A/c	500		By Balance C/d	500
		500			500




Investments Securities Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
14-May	To Cash A/C	3500		By Balance C/d	3500
		3500			3500




Salaries Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
17-May	To Cash A/C	750		By Balance C/d	4750
20-May	To Cash A/C	4000
		4750			4750


Salaries Expense Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
19-May	To Salaries Payable A/c	100		By Balance C/d	100
		100			100




Bank Loan Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
22-May	To Cash A/c	3000		By Balance C/d	3000
		3000			3000





Salaries Payable Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
	To Balance C/d	100	19-May	By salaries Expense A/c	100
		100			100




Interest Payable Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
22-May	To Cash	45		By Balance C/d	45
		45			45




Discount Received Accounts
Dr					Cr
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
	To Balance C/d	230	28-May	By Accounts Payable A/c	230
		230			230

Trail Balance:

In The Books Of Tech works
Trial Balance as on…
	Dr	Cr
Ledger Balances	Amount ($)	Amount ($)
Sales A/c		26700
Purchase A/c	12606
Accounts Payable A/c		1630
Furniture A/c	1200
Carriage A/c	150
Cash A/c	7555
Advertisement	4000
Rent A/c	500
Investment Securities		3500
Salaries A/c	4750
Salaries Expenses A/c		100
Bank Loans A/c		3000
Salaries Payable A/c		100
Interest Payable A/c		45
Discount Received A/c		230
Retained Earnings	4544
	35305	35305

Bibliography:

Craig, D. and Michaela, R., 2014. Financial Accounting Theory.

Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.

Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting. Pearson Higher Education AU.

Scott, W.R., 2015. Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.

Warren, C.S. and Jones, J., 2018. Corporate financial accounting. Cengage Learning.

Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education

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