tom and jerry do not have an accountant and have approached you to help them prepare 245535

Tom and Jerry do not have an accountant and have approached you to help them prepare their annual financial statements for the year ended December 31, 2012. The financial statements should include a trial balance, balance sheet and income statement. You are required to review the below series of transactions which occurred during the year from January 1, 2012 to December 31, 2012 and write the accounting journal entries for the each transaction. Compile all the transactions in the year and prepare “T” accounts, a trial balance for the year then ended, Balance Sheet as at December 31, and a statement of income for the year then ended. Transactions 1. Tom and Jerry equally contributed US$ 1,000,000 as their share of capital in the business on 1/1/2012. They decided to keep the capital in the Company’s bank account. 2. On the same day, their friend Mario offered them some space to use as office and a store on rental basis. Mario, in exchange of the space, demanded an advance rent for QR. 200,000 for two years. The cash was paid by Tom and Jerry on the same day. 3. On the evening of 1/1/2012, Tom and Jerry went to the furniture store to buy furniture for their store. They bought furniture worth QR. 100,000. They intended to scrap this furniture in 5 years before they will buy the new furniture. 4. A month later, when the office was set up, they decided to buy the tools which they can further sell in the market. They placed an order and they were able to buy 1000 hammers for US$ 10 each, Cement 1000 Kgs for US$ 50 per kg and 500 drill machines for US$ 100 per machine. Since they just started the business with little money they had, they negotiated with the supplier to supply them the desired goods on credit terms to be paid back within 60 days. They intended not to buy further stock till it is completely sold. 5. They noticed that they will become famous if they spent some money on advertisement. Therefore they decided to pay the local newspaper an amount of US$ 1,000 cash in total for advertising about their new company for 3 months. They advertisement was made attractive by saying “cheap tools for sale” and the prices were marketed as follows a. Hammer US$ 20 per hammer b. Cement US$ 100 per Kg


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