Sample Midterm - Sample Midterm-2.pdf

Question

Nitish Lath · Accepted Answer

Solution 1:
a. Prepaid rent as on 31-12-2019
	Prepaid rent 31-12-2019
	               200 
Calculation:
	Particulars
	2019
	Total liabilities
	         16,500 
	Total equity
	         47,000 
	Total liabilities and equity (16500+ 47000)
	         63,500 
	Total Assets (equal to liabilities)
	         63,500 
	Total assets other than prepaid rent (50000+10300+3000)
	         63,300 
	Prepaid rent (63500- 63300)
	               200 
b. Cash flow from financing activity:
	Cash flows from financing (2020)
	           2,000 
Calculation:
	Particulars
	2020
	Cash flow from operation
	5500
	Less: Cash flows from investing
	-2500
	Less: Changes in cash
	-1000
	Cash flows from financing activities (5500- 2500- 1000)
	2000
c. Cash balance as on 31-12-2020:
	Cash (31-12-2020)
	         11,300 
Calculation:
	Particulars
	2020
	Opening cash balance
	10300
	Add: Changes in cash
	1000
	Closing cash balance
	11300
d. PPE balance:
	PPE net (31-12-2020)
	         50,500 
Calculation:
	Particulars
	2020
	PPE opening balance
	         50,000 
	Add: investment made (Cash flows from investing activities)
	           2,500 
	Less: Depreciation
	         (2,000)
	Net PPE (50000+ 25000 -2000)
	         50,500 
e. Wages expenses:
	Wages expense (2020)
	           8,000 
Calculation:
	Particulars
	2020
	Retained earnings closing balance
	6000
	Add: Dividend
	2000
	Less: Opening balance
	-2000
	Net income
	6000
	Add: Other expenses
	6000
	Less: Gross profit
	-20000
	Wages expenses
	-8000
Solution 2:
1. Journal entries
	 
	Particulars
	Amount
	a.
	Cash (Current asset) increases by
	$100,000 
	 
	Common stock (Equity) increases by
	$100,000 
	 
	 
	 
	b.
	Mobile (Asset) Increases by
	$24,000 
	 
	Cash (Current asset) decreases by
	$24,000 
	 
	 
	 
	 
	Depreciation expense (IE) increases by
	$12,000 
	 
	Accumulated depreciation (Liability) increases by
	$12,000 
	 
	 
	 
	c.
	Rent (IS) expenses increases by
	$4,

Sample Midterm - Sample Midterm-2.pdf

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