Question

Account no. Account Description 101 Cash at bank 102 Accounts receivable 110 Office supplies 120 Office equipment and furniture 130 Motor vehicles 201 Accounts payable 210 Bank loan 301 Share capital 401 Revenue 510 Rent expense 520 Electricity expense 530 Advertising expense 540 Bank charges 550 Interest expense 560 Wages expense 1/3 Natasha opened a business bank account to begin the business, contributing $8,000 cash in exchange for shares in the company. The company obtained a bank loan for $42,000. The loan will be repaid in 5 years' time (treat as a non-current liability). The bank has offered the loan interest-free for the first 3 months, so there is no interest on the bank loan for the first 3 months. 15/3 Recorded revenue for the first half of the month of $6,750 deposited to the business bank account as cash and $4,200 on credit Purchased a laptop computer at a cost of $3,000 and a new office desk and chair costing $1,200. These purchases were paid by transfer from the business bank account. Purchased office supplies costing $1,050 on credit. Hired a new landscape design assistant to help with drafting and finalising landscape designs. The annual salary payable on a pro-rata basis is $44,000. Wages are paid monthly at the end of the month. Recorded revenue for the first half of the month of $6,750 deposited to the business bank account as cash and $4,200 on credit.​

Answer 1

Here is the updated chart of accounts after the transactions:

Account no. Account Description Debit Credit

101 Cash at bank $14,700

102 Accounts receivable $4,200

110 Office supplies $1,050

120 Office equipment and furniture $4,200

130 Motor vehicles

201 Accounts payable $1,050

210 Bank loan $42,000

301 Share capital $8,000

401 Revenue $11,950

510 Rent expense

520 Electricity expense

530 Advertising expense

540 Bank charges

550 Interest expense

560 Wages expense

Explanation of Transactions:

1/3: Natasha opened a business bank account to begin the business, contributing $8,000 cash in exchange for shares in the company.

Debit: Cash at bank ($8,000)

Credit: Share capital ($8,000)

1/3: The company obtained a bank loan for $42,000. The loan will be repaid in 5 years' time (treat as a non-current liability). The bank has offered the loan interest-free for the first 3 months, so there is no interest on the bank loan for the first 3 months.

Debit: Cash at bank ($42,000)

Credit: Bank loan ($42,000)

15/3: Recorded revenue for the first half of the month of $6,750 deposited to the business bank account as cash and $4,200 on credit.

Debit: Cash at bank ($6,750)

Debit: Accounts receivable ($4,200)

Credit: Revenue ($11,950)

15/3: Purchased a laptop computer at a cost of $3,000 and a new office desk and chair costing $1,200. These purchases were paid by transfer from the business bank account.

Debit: Office equipment and furniture ($4,200)

Credit: Cash at bank ($4,200)

15/3: Purchased office supplies costing $1,050 on credit.

Debit: Office supplies ($1,050)

Credit: Accounts payable ($1,050)

15/3: Hired a new landscape design assistant to help with drafting and finalising landscape designs. The annual salary payable on a pro-rata basis is $44,000. Wages are paid monthly at the end of the month.

Debit: Wages expense ($3,667)

Credit: Cash at bank ($3,667)

Note: The wage expense is calculated as $44,000/12 months = $3,667 per month.

Step-by-step explanation: