ANSWER TO THE QUESTION NO.

1
(a)
Date Accounts Title and Explanation Ref Debit Credit
Jan-1 Cash 1,00,000
Capital 1,00,000
(As invested in the business)
Jan-2 Prepaid Rent 36,000
Cash 36,000
(As paid rent in advance)
Jan-3 Equipment 80,000
Cash 60,000
Notes Payable 20,000
(As purchased on cash and on
notes payable)
Jan-4 Office Supplies 17,600
Accounts Payable 17,600
(As purchased on account)
Jan-13 Cash 28,500
Service Revenue 28,500
(As provided service)
Jan-13 Accounts Payable 17,600
Cash 17,600
(As paid accounts payable)
Jan-14 Salaries and Wages expense 19,100
Cash 19,100
(As paid wages)
Jan-18 Cash 32,900
Account Receivable 21,200
Service Revenue 54,100
(As provided service on cash and
on account)
Date Accounts Title and Explanation Ref Debit Credit
Jan-23 Cash 15,300
Account Receivable 15,300
(As received money from
customers)
Jan-25 Cash 4,000
Unearned Service Revenue 4,000
(As received payment in advance)
Jan-26 Office Supplies 5,200
Accounts Payable 5,200
(As purchased on account)
Jan-28 Utilities expense 19,000
Cash 19,000
(As paid water bill)
Jan-31 Advertising expense 5,000
Cash 5,000
(As paid for advertising)
Jan-31 Utilities expense 2,470
Accounts Payable 2,470
(As received electricity bill for
January)
Jan-31 Utilities expense 1,494
Accounts Payable 1,494
(As received telephone bill)
Jan-31 Miscellaneous expense 3,470
Cash 3,470
(As paid during the month)
(b) Cash
Date Explanation Ref Debit Credit Balance
Jan-1 J1 1,00,000 1,00,000
Jan-2 J1 36,000 64,000
Jan-3 J1 60,000 4,000
Jan-13 J1 28,500 32,500
Jan-13 J1 17,600 14,900
Jan-14 J1 19,100 (4,200)
Jan-18 J1 32,900 28,700
Jan-23 J1 15,300 44,000
Jan-25 J1 4,000 48,000
Jan-28 J1 19,000 29,000
Jan-31 J1 5,000 24,000
Jan-31 J1 3,470 20,530

Capital
Date Explanation Ref Debit Credit Balance
Jan-1 J1 1,00,000 1,00,000

Prepaid Rent
Date Explanation Ref Debit Credit Balance
Jan-2 J1 36,000 36,000

Equipment
Date Explanation Ref Debit Credit Balance
Jan-3 J1 80,000 80,000
 Notes Payable
Date Explanation Ref Debit Credit Balance
Jan-3 J1 20,000 20,000

Office Supplies
Date Explanation Ref Debit Credit Balance
Jan-4 J1 17,600 17,600
Jan-26 J1 5,200 22,800

Accounts Payable
Date Explanation Ref Debit Credit Balance
Jan-4 J1 17,600 17,600
Jan-13 J1 17,600 000
Jan-26 J1 5,200 5,200
Jan-31 J1 2,470 7,670
Jan-31 J1 1,494 9,164

Service Revenue
Date Explanation Ref Debit Credit Balance
Jan-13 J1 28,500 28,500
Jan-18 J1 54,100 82,600

Salary and Wages Expense

Date Explanation Ref Debit Credit Balance
Jan-14 J1 19,100 19,100
 Unearned Service Revenue
Date Explanation Ref Debit Credit Balance
Jan-25 J1 4,000 4,000

Advertising Expense
Date Explanation Ref Debit Credit Balance
Jan-1 J1 5,000 5,000

Utilities Expense
Date Explanation Ref Debit Credit Balance
Jan-28 J1 19,000 19,000
Jan-31 J1 2,470 21,470
Jan-31 J1 1,494 22,964

Miscellaneous Expense
Date Explanation Ref Debit Credit Balance
Jan-31 J1 3,470 3,470

Accounts Receivable
Date Explanation Ref Debit Credit Balance
Jan-18 J1 21,200 21,200
Jan-23 J1 15,300 5,900
(c)
Anna Car Repairing Shop
Trial Balance
January 31, 2018

Accounts Title Debit Credit

Cash $20,530

Accounts Receivable $5,900

Utilities Expense $22,964

Advertising Expense $5,000

Miscellaneous Expense $3,470

Prepaid Rent $36,000

Office Supplies $22,800

Salary and Wages Expense $19,100

Accounts Payable $9,164

Service Revenue $82,600

Unearned Service Revenue $4,000

Equipment $80,000

Notes Payable $20,000

Capital $1,00,000

$2,15,764 $2,15,764
(d)

Anna Car Repairing Shop

Income Statement
For the month ended January 31, 2018

Service Revenue:

Service Revenue $82,600

_______
Total service revenue $82,600

Expenses:

Utilities expense $22,964

Advertising expense $5,000

Miscellaneous expense $3,470

Salary and wages expense $19,100

_______
Total expenses $50,534
_______

Net Income $32,066

 Anna Car Repairing Shop
Balance Sheet
March 31, 2018

Assets:
Current Assets:

Cash $20,530
Accounts Receivable $5,900
Prepaid Rent $36,000
Office Supplies $22,800
_______
Total current asset $85,230

Fixed Asset:

Equipment $80,000
________
Total Assets $1,65,230

Liabilities & Owner’s Equity:

Current Liabilities:
Accounts Payable $9,164
Unearned service revenue $4,000
Notes Payable $20,000
_______
Total current liabilities $33,164

Owner’s Equity:
Beginning capital $1,00,000
Add: Net Income $32,066
_________
Closing capital $1,32,066
__________
Total liabilities & owner’s equity $1,65,230
 ANSWER TO QUESTION NO. 02

A. Cost Principle:
The cost principle is an accounting concept that requires the
numbers on the financial statements be based on actual expenses from
business transactions incurred during the period.

B. Economic Entity Assumption:

An assumption that requires that the activities of the entity be
kept separate and distinct from the activities of its owner and all other
economic entities.

C. Monetary Unit Assumption:

An assumption stating that companies include in the accounting
records only transaction data that can be expressed in terms of money.

D. Going Concern:
An accounting principle that requires companies to be
accounted for as if they will continue operating into the future is known
as going concern.

E. Periodicity:
Periodicity means that accountants will assume that a
company's complex and ongoing activities can be divided up and
reported in annual, quarterly and monthly financial statements.

F. Revenue Recognition Principle:

The revenue recognition principle is an accounting principle
that requires revenue to be recorded only when it is earned. It means that
revenues or income should be recognized when the services or products
are provided to customers regardless of when the payment takes place.

G. Matching Concept:
The matching concept represents the primary differences
 between accrual accounting and cash basis accounting. "Matching"
means that firms report revenues and the expenses that brought them in
the same period.
H. Accrual Basis of Accounting:
The accrual basis of accounting is a system of recognizing
revenues and expenses when they are incurred instead of focusing on
when they are paid or collected.

I. Dual Aspect of Accounting:

The dual aspect concept states that every business transaction
requires recordation in two different accounts. This concept is the basis
of double entry accounting, which is required by all accounting
frameworks in order to produce reliable financial statements.
 ANSWER TO THE QUESTION NO.3

(a)
Baker Corporation
Statement of Cash Flows
For the year ended December 31, 2015

Cash flows from operating activities:

Net income
$1,06,000
Adjustments to reconcile net income to net
cash provided by operating activities.
Depreciation expense $30,000
Decrease in account receivable $30,000
Increase in inventory ($1,40,000)
Increase in accounts payable $70,000
Increase in notes payable $20,000
__________
$10,000 ________

Net cash provided by operating activities: $1,16,000

Cash flows from investing activities:

Purchase of equipment ($40,000)
_________
Net cash used by investing activities ($40,0000)

Cash flows from financing activities:

long term debt $30,000
Payment of cash dividend ($76,000)
________
Net cash used by financing activities ($46,000)

Net decrease in cash ($30,000)

Cash at beginning of period $70,000

Cash at end of period $40,000

(b) Calculation of the following ratios:

Current asset
(i) Current ratio =
Current liabilities

Cash + accounts receivable + inventory

=
Accounts payable + notes payable + accrued expenses

$40,000+$320,000+$460,000
=
$390,000+$110,000+$20,000

$820,000
=
$520,000

= 1.58:1

Net credit sales

(ii) Accounts receivable turnover =
Average accounts receivable

$2,200,000
=
($350,000+$320,000)/2

$2,200,000
= =6.57 times
$335,000
 Net income
(iii) Profit margin =
Net sales
$106,000
=
$2,200,000

= 4.8 %

Net sales
(iv) Asset turnover =
Average total assets

$2,200,000
=
($1,110,000+$1,200,000)/2

$2,200,000
=
$1,155,000

= 1.90 times
.

Net income
(v) Return on asset (ROA) =
Average total assets

$106,000
=
($1,110,000+$1,200,000)/2

= 9.18 %
(vi) Net income
Return on common stock holder’s equity =
Average common stock holders’ Equity

$106,000
= [
{($360,000) + ($330,000)}/2

$106,000
=
$345,000

= 30.72 %

Total liability
(vii) Debt to Asset =
Total asset

$840,000
=
$1,200,000

= 70 %

Income before income taxes & interest expenses

(viii)Times interest earned ratio =
Interest expense

$151,000 + $29,000 $180,000

= =
$29,000 $29,000

= 6.21 times
 North South University

Assignment Cover Page

Department of Accounting & Finance

Student Name: Sadif Sayeed

Student ID No: 1831131630

Section : 25

Course name and code: ACT201

Submitted to: Tsj

Date of Submission: 15/04/2019