Reference no: EM132168235
Learning outcomes to be achieved by completion of the assessment:
1. Record income and receipts from credit customer, purchases, expenditures and payments to supplier.
2. Differentiate between accrual and cash basis accounting.
CASE STUDY
Sultan formed the Daewoo Sign Enterprise on October 1, 2018. During the month, the following financial transactions occurred:
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2018 October
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| 1 |
Daewoo invested OR 30,000 in the new business.
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| 2 |
Acquired a service vehicle in the amount of OR 5,000 on account.
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| 3 |
Acquired supplies for cash, OR 27,000. (Note: Supplies are charged to expense right away.)
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| 9 |
Received OR 17,500 cash for signs painted.
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| 10 |
Paid the month's rent, OR 1,000.
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| 11 |
Painted signs for Compaj Company on account, OR 40,000
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| 16 |
Withdrew OR 5,000 for personal use.
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| 23 |
Collected OR10,000 from Compaj Company.
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| 27 |
Paid salaries for the month, OR 7,000.
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| 31 |
Paid Omantel OR2,500 for communication services for the month.
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Requirements: Now that you have reviewed the case study above, respond to the following requirements on your own.
Q1. Record each of the above transactions in general journal. Explanations maybe omitted. Use the following account titles to journalize the transactions:
a. Cash
b. Accounts Receivable
c. Service Vehicle
d. Accounts Payable
e. Daewoo, Capital
f. Daewoo, Withdrawal
g. Service Fee Income
h. Supplies Expense
i. Rent Expense
j. Salary Expense
k. Utility Expense
Q2. Prepare the end-of-month report to account for the incomes and expenses of Daewoo Sign Enterprise under cash basis accounting.
Q3. Prepare the end-of-month report to account for the incomes and expenses of Daewoo Sign Enterprise under accrual basis accounting.
Q4. Explain the difference between cash basis and accrual basis accounting. The student may define/explain and give example for both cash basis and accrual basis computation of accounting net income.