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Application Of Accounting Cycle On A Hypothetical Company

2730 words - 11 pages

n 1 January, 2011 Shadow Stormz Ltd. started their company, depositing $2,10,000 in cash in the name of the company, in exchange for 21,000 shares of $10 per value stock of the corporation.
Jan 10: Purchased goods on cash $1,00,000 from ABC.
21: Sold goods on cash $80,000 to Pro Asia.
Feb 05: Purchased goods on credit $88,000 from ABC.
16: Sold goods on credit $49,000 to Pro Asia.
25: Paid advertisement bill of $5,000.
28: Sold goods to Sarmon’s Brothers for $1,000.
Mar 07: Purchased store equipment for $30,000.
17: Paid $50,000 to ABC.
29: Received cash $30,000.for Pro Asia.
Apr 01: Store equipment purchased on credit $50,000.
...view middle of the document...

Dec 15: Paid electricity bill $12,000.
19: Sold goods worth $75,000.
31: Declared and paid dividend of $30,000.
31: Nelson returned the loan with interest.
31: Paid rent $6,000 and salary $6,000 for the last six months.
Date | Details | P.R | Debit ($) | Credit ($) |
2011Jan-1 10 21Feb-5 16 25 28Mar-7 | Cash---------------------------------Dr. Common stock-----------------Cr.(Recorded investment of the stock holders) | | 2,10,0001,00,00080,00088,00049,0005,0001,00030,000 | 2,10,0001,00,00080,00088,00049,0005,0001,00030,000 |
| Purchase----------------------------Dr. Cash-----------------------------Cr.(Bought goods on cash) | | | |
| Cash---------------------------------Dr. Sales-----------------------------Cr.(Sold goods on cash) | | | |
| Purchase----------------------------Dr. A/C receivable-ABC----------Cr.(Bought goods on credit) | | | |
| A/C receivable-Pro Asia---------Dr. Sales-----------------------------Cr.(Sold goods on credit) | | | |
| Advertisement expenses---------Dr. Cash----------------------------Cr.(Paid advertisement bill) | | | |
| A/C receivable-Sarmon----------Dr. Sales----------------------------Cr.(Sold on credit) | | | |
| Store equipment------------------Dr. Cash----------------------------Cr.(Bought store equipment on cash) | | | |
Journal of Shadow Stormz Ltd.

Date | Details | P.R | Debit($) | Credit($) |
Mar-17 29Apr-1 30May-6 31 | A/C payable-ABC----------------Dr. Cash----------------------------Cr.(Paid to ABC for goods) | | 50,00030,00050,00030,00040,0001,70,000 | 50,00030,00050,00030,00040,0001,70,000 |
| Cash--------------------------------Dr. A/C receivable-Pro Asia-----Cr.(Received from Pro Asia for sale) | | | |
| Store equipment------------------Dr. Store equipment supplier---Cr.(Bought equipment on credit) | | | |
| Bank--------------------------------Dr. Cash----------------------------Cr.(Deposited to bank) | | | |
| Store equipment supplier-------Dr. Cash----------------------------Cr.(Paid store equipment supplier) | | | |
| Cash--------------------------------Dr. IDLC loan---------------------Cr.(Took loan from IDLC on 12% interest) | | | |

Date | Details | P.R | Debit($) | Credit($) |
May-31Jun-3 5 11 15 30 | Sales return and allowance------Dr. A/C receivable-Pro Asia-----Cr. (Pro Asia returned goods) | | 5,0008,0001,00010,00070,0006,0006,000 | 5,0008,0001,00010,00070,00012,000 |
| A/C payable-ABC----------------Dr. Purchase return and allowance-Cr.(Returned goods to ABC) | | | |
| Bad debt expense-----------------Dr. A/C receivable-Sarmon------Cr.(Wrote off Sarmon a/c as uncollectable) | | | |
| Electricity expenses--------------Dr. Cash----------------------------Cr.(Paid electricity bill) | | | |

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