Assignment

Assignment
Process financial transactions

 1.Richo Services Ltd. was formed on May 1, 2020. The following transactions took place
during the first month.
 Transactions on May 1:
 Richo invested $50,000 cash in the company, as its sole owner.
 Hired two employees to work in the warehouse. They will each be paid a salary of £2,800
per month.
 Signed a 2-year rental agreement on a warehouse; paid £24,000 cash in advance for the
first year.
 Purchased furniture and equipment costing £30,000. A cash payment of £6,000 was made
immediately; the remainder will be paid in 6 months.
 Paid £1,800 cash for a one-year insurance policy on the furniture and equipment.
 Transactions during the remainder of the month:
 Purchased basic office e supplies for £940 cash.
 purchased more office ce supplies for £1,300 on account.
 Total revenues recognized were £18,000, £5,000 cash and £13,000 on account.
 Paid £400 to suppliers for accounts payable due.
 Received £3,000 from customers in payment of accounts receivable.
 Received utility bills in the amount of £260, to be paid next month.
 Paid the monthly salaries of the two employees, totaling £5,600.
Instructions
(a) Prepare journal entries to record each of the events listed. (Omit explanations.)
(b) Post the journal entries to T-accounts.
(c) Prepare a trial balance as of May 31, 2020.
2. The trial balance of MULLER Service Co. shown below does not balance.
MULLER Service
Trial Balance
June 30, 2017
Debit Credit
Cash € 3,840
Accounts Receivable 2,898
Supplies 800
Equipment 3,000
Accounts Payable 2,666
Unearned Service Revenue 2,200
M, Capital 9,000
M, Drawing 800
Service Revenue 2,380
Salaries and Wages Expense 3,400
Utilities Expense 910
$ 14,008 $17,886
Each of the listed accounts has a normal balance per the general ledger. An examination of the
ledger and journal reveals the following errors.
1. Cash received from a customer in payment of its account was debited for €570, and Accounts
Receivable was credited for the same amount. The actual collection was for €750.
2. The purchase of a computer on account for €620 was recorded as a debit to Supplies for €620
and a credit to Accounts Payable for €620.
3. Services were performed on account for a client for €890. Accounts Receivable was debited
for €890, and Service Revenue was credited for €89.
4. A debit posting to Salaries and Wages Expense of €700 was omitted.
5. A payment of a balance due for €309 was credited to Cash for €309 and credited to Accounts
Payable for €390.
6. The payment of a €600 cash dividend was debited to Salaries and Wages Expense for €600
and credited to Cash for €600.
Instructions
Prepare a correct trial balance.
3.Dr.Musa has been practicing as a cardiologist for three years. During April 2020, Musa
completed the following transactions in her practice of cardiology:
Apr. 1. Paid office rent for April, bir800.
3. Purchased equipment on account, bir 2,100.
5. Received cash on account from patients, bir 3,150.
8. Purchased X-ray film and other supplies on account, bir 245.
9. One of the items of equipment purchased on April 3 was defective. It was returned with the
permission of the supplier, who agreed to reduce the account for the amount charged for the
item, bir 325.
12. Paid cash to creditors on account, bir 1,250
Apr. 17. Paid cash for renewal of a six-month property insurance policy, bir 370.
20. Discovered that the balances of the cash account and the accounts payable account as of
April 1 were overstated by bir 200. A payment of that amount to a creditor in March had not
been recorded. Journalize the $200 payment as of April 20.
24. Paid cash for laboratory analysis, bir 545.
27. Paid cash from business bank account for personal and family expenses, bir 1,250.
30. Recorded the cash received in payment of services (on a cash basis) to patients during April,
bir 1,720. 30. Paid salaries of receptionist and nurses, bir 1,725.
30. Paid various utility expenses, bir 360.
30. Recorded fees charged to patients on account for services performed in April, bir 5,145.
30. Paid miscellaneous expenses, bir 132.
Musa’s account titles, numbers, and balances as of April 1 (all normal balances) are listed as
follows: Cash, 11, bir 4,123; Accounts Receivable, 12, bir 6,725; Supplies, 13, bir 290; Prepaid
Insurance, 14, bir 465; Equipment, 18, $19,745; Accounts Payable, 22, bir 765; Musa, Capital,
31, bir 30,583; Musa,, Drawing, 32; Service income, 41; Salary Expense, 51; Rent Expense
Instructions
1. Open a ledger of standard four-column accounts for Dr. Musa, as of April 1. Enter the
balances in the appropriate balance columns and place a check mark (✔) in the Posting
Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger
before proceeding with the next instruction.)
2. Journalize each transaction in a two-column journal.
3. Post the journal to the ledger
4. Prepare a trial balance as of April 30

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Process financial transactions

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