QUESTION 1

The Oman Cement Company is considered to be a building block for the nation’s construction industry.
(Anon., 2021) Being one of the core industries in Oman, it specializes in providing the best quality
cement to the Sultanate. Being amongst the elite cement manufacturing firm in the region, OCC has
helped the country in infrastructure development. (Dalis, 2019).

The following transactions took place within the past month of February. These transactions have been
recorded and analyzed in each individual point. In addition to this, their effect on the accounting
equation has also been shown.

1. In order to improve their logistics management, OCC bought six new delivery vans which were
worth 80000 OMR. Payment for these vans was made on cash by OCC.

ENTRY DEBIT CREDIT

Vehicle A/c 80000 OMR
Bank A/c 80000 OMR

There will be an increase in assets as the company purchased equipment it did not have before.
Simultaneously, our assets will decrease due to deduction of cash due to the purchase of equipment.
(Refer to the table at the end of Question 1)

2. Advance for the head office’s rent mounting to 34000 OMR was paid to the realtor. Others
expenses relating to office repairs worth 26000 OMR were also incurred.

ENTRY DEBIT CREDIT

Prepaid Rent A/c 34000 OMR
Office Expenses A/c 26000 OMR
Bank A/c 60000 OMR

There will be a decrease in cash due to the payment of expenses, meaning that assets will decrease.
Also, Net Income will decrease which will cause a decrease in equity.

3. OCC also purchased supplies worth 5000 OMR on account.

ENTRY DEBIT CREDIT

Purchases A/c 5000 OMR
Accounts Payable A/c 5000 OMR

This credit purchase will cause the assets (inventory) to increase and Liabilities (Accounts Payables) to
increase.

4. However, within the same month, OCC was able to pay back the amount it owed (5000 OMR)
to its supplier.

ENTRY DEBIT CREDIT

Accounts Payable A/c 5000 OMR
Bank A/c 5000 OMR
This transaction will cause the assets (cash) to decrease and the liabilities (Account Payable) to decline.

5. OCC made sales to a customer “Miles James” worth 5500 OMR. The customer asked to be
biller, meaning that he did not want to pay the bill immediately. The company accepts this
demand as the customer is quite important.

ENTRY DEBIT CREDIT

Accounts Receivable A/c 5500 OMR
Sales A/c 5500 OMR

This will cause the assets (Debtors) to rise and the Net income to rise as well, causing an increase in
Equity.

6. The previous month, OCC declared to pay cash dividends to its shareholders in the next month.
Therefore, the payment was to be made in this month. The payment is worth 90,000 OMR.

ENTRY DEBIT CREDIT

Dividends Payable A/c 90000 OMR
Bank A/c 90000 OMR

This will cause the assets (cash) to decline and the equity (dividends) to fall as well.

7. OCC purchased some equipment on account for 6500 OMR. The payment for this purchase in
due within six months.

ENTRY DEBIT CREDIT

Equipment A/c 6500 OMR
Accounts Payable A/c 6500 OMR

This will cause the assets (equipment) to increase and liabilities (accounts payable) to rise as well.

8. After the successful payment of dividends, more investors seem to be interested in owning
OCC’s shares. Therefore, OCC issues worth 27000 OMR shares of common stock.

ENTRY DEBIT CREDIT

Bank A/c 27000 OMR
Share Capital A/c 27000 OMR

This will cause the assets (cash) to increase and the equity (share cap) to rise as well.

9. At the end of this month, Miles James paid back the amount he owed to OCC which was worth
5500 OMR.

ENTRY DEBIT CREDIT

Bank A/c 5500 OMR
Accounts Receivable A/c 5500 OMR

This will cause the assets (cash) to rise while simultaneously causing the assets to decline due to the
decline in accounts receivable.
 10. OCC paid monthly salaries mounting to 90000 OMR to its employees at the end of this month.

ENTRY DEBIT CREDIT

Administrative expenses A/c 90000 OMR
Bank A/c 90000 OMR

ASSETS LAIBILITY EQUITY

Transaction Cash Equipmen Supplies Debtors Payables Net Dividends Common
t Income Stock

1. Purchased Equipment for Cash -80,000 +80,000

2. Paid Expenses by Cash -60,000 -60,000

3. Purchased Supplies on Credit +5000 +5000

4. Paid for the Supplies by Cash -5000 -5000

5. Sales made on Credit +5500 +5500

6. Payment of Cash Dividends -90,000 -90,000

7. Purchased Equipment on Credit +6500 +6500

8. Shares Issue +27,000 +27,000

9. Collection of Debt +5500 -5500

10. Paying off Salaries -90,000 -90,000

Balance -292,500 +86500 +5000 0 +6500 -144,500 -90,000 +27,000

Accounting Equation -201,000 OMR -201,000 OMR

This will cause the assets (cash) to decline and the net income to decline as well, casing a decrease in
equity.
Bibliography
Anon., 2021. OCC-About Us. [Online]
Available at: https://occ.om/#

Dalis, T., 2019. Construction Week-OCC. [Online]

Available at: https://www.constructionweekonline.com/tags/oman-cement-company