Sam Jones, a restaurant operator, commenced business on November 1, 2022 with $30, 000 cash as capital. He has requested you, his Accountant, to record the following transactions in the month of November, 2022.
Fundamentals of Accounting – ACT 001
Fall 2023 – Assignment #1 – Posted October 1, 2023
Instructions – All questions are to be attempted. Questions must be completed using Microsoft Word and uploaded into Moodle. The due date for this assignment is October 9, 2023. This assignment is worth 15% of your final grade.
Question #1
Sam Jones, a restaurant operator, commenced business on November 1, 2022 with $30, 000 cash as capital. He has requested you, his Accountant, to record the following transactions in the month of November, 2022.
Nov 2 Paid $15 000 of the opening cash into a bank account.
Nov 7 Paid 10,000 cash for a Motor Car
Nov 7 Paid Advertising cost of $3,000 by cheque
Nov 12 Sold goods amounting to $5,000 on credit to S. Lawrence
Nov 15 Took $5,000 from the bank for personal use.
Nov 18 Purchased from P. Labelle and T. Jakes, goods on credit for $5,000 and $2,000 respectively
Nov 20 Received cash of $2,500 from S. Lawrence
Nov 22 Paid P. Labelle by cheque, $2,800. Paid T. Jakes by cash, $1,000
Nov 25 Received a loan by cheque from NCB amounting to $20,000
Nov 30 Returned goods valued at $1000 to P. Labelle
Required:
Write up the relevant ledger accounts and balance them………………40 Marks
Prepare the Trial Balance as at November 30 2022…………………………15 Marks
Question #2
Identify and explain the Accounting concept that is involved in each of the following: 8 Marks
The hotel manager thinks that it is a waste of time to be preparing financial statements every year.
A case of food poisoning occurred in a restaurant. The owner is being sued by a number of clients who were affected. The estimated cost of the loss the restaurant is likely to suffer from this lawsuit is not yet ascertained. However, a provisional amount is being recorded now as an expense.
A restaurant has traditionally depreciated its fixed assets using the reducing balance method. However, this year it has decided to use the straight line method.
Several minor expenses have been paid for, and classified as miscellaneous expenses. However, there is no receipt for them.
What is a Trial Balance 2 Marks
List 4 limitations of the trial balance? 4 Marks
What is a Suspense account? 2 Marks
Identify two reasons why a suspense account should be opened. 4 Marks
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