Accrual-Based Accounting: MicroSystems Financial Statements, July 2021

This assignment focuses on preparing financial statements for MicroSystems, a retailer of electronics, for the month of July 2021. The task involves recording various transactions using journal entries, applying accrual-based accounting principles as opposed to cash-based, and utilizing the FIFO (First-In, First-Out) method for inventory valuation. Key transactions include bank loans, insurance expenses, motor vehicle purchase, rent payments, purchases on credit and cash, sales, wages, and other operational expenses. The assignment also addresses depreciation, bad debts, and outstanding expenses like telecommunications and electricity. The final output includes a perpetual inventory analysis using the FIFO method, providing a detailed overview of MicroSystems' financial activities during its first month of operation. This document is available on Desklib, a platform offering a wealth of academic resources.

Assignment Financial
Statements

Table of Contents
MAIN BODY..................................................................................................................................3
Journal Entries.............................................................................................................................3

MAIN BODY
Journal Entries
Journal Entries
Date Particulars L.
F
Debit
($)
Credit
($)
2021
1-Jul Bank A/C Dr 60000
To Bank Loan A/C
(Being loan taken from bank) 60000
1-Jul Insurance Expense A/C Dr (4200/12) 350
Prepaid Insurance A/C Dr ((4200/12) *11)
3850
To Bank A/C
(being insurance expense paid) 4200
1-Jul Motor Vehicle A/C 24000
To Capital A/c
(Being Motor Vehicle Purchased) 24000
1-Jul Prepaid Rent A/C Dr 30000
To Bank A/C
(Being Rent paid for next six months) 30000
1-Jul Fixtures and Fittings A/C Dr 12000
To Bank A/C
(Being Fixtures and Fittings purchased) 12000
2-Jul Advertising A/C Dr 2800
To bank A/C
(Being amount paid for advertising) 2800
2-Jul Purchases A/c Dr (20*890 + 20*360) 25000
To Accounts Payables A/C
(Being goods purchased on credit) 25000
3-Jul Bank A/C Dr 12950
To Sales A/C (7*1850)
(Being goods sold) 12950
4-Jul Accounts Receivable A/C Dr 6360
To Sales A/C (12*530)
(being goods sold on credit) 6360
6-Jul Bank A/C Dr 120
To Training Expense A/C
(Being training seminar ticket amount paid) 120
7-Jul Purchases A/C Dr (140*10) 1400
To Cash a/C
(Being goods purchased for cash) 1400
10-Jul Purchases A/C Dr (20*380) 7600

To Accounts Payable A/C
(Beings goods purchased on credit) 7600
14-Jul Cash A/C Dr 4100
To Accounts Receivables A/C
(Being cash received from customers) 4100
15-Jul Cash A/C Dr (14*530) 7420
To Sales A/C
(Being goods sold for cash) 7420
18-Jul Drawings A/C Dr 4000
To Cash A/C
(Being drawings made by David) 4000
21-Jul Maintenance & Repairs Expense A/C Dr 230
To Cash A/C
(Being shop fixture repaired) 230
22-Jul Accounts Receivable A/C Dr (10*1880 + 6*495) 21770
To sales A/C
(Being goods sold for cash) 21770
23-Jul Wages Expense A/c Dr 950
Prepaid wages 950
To Cash A/C
(Being wages paid to Carly) 1900
24-Jul Purchases A'/c Dr (20*900 +10*140) 19400
To Accounts Payables A/C
(Being goods purchased on credit) 19400
25-Jul Drawings A/C Dr 3200
To Bank A/C
(Being payment made for David’s credit card) 3200
26-Jul Bank A/C Dr 30000
To Bank Overdraft A/C
(Being O/D limit given by bank) 30000
27-Jul Accounts Payable A/C Dr 25000
To Bank A/C
(Being payment made to suppliers) 25000
28-Jul Cleaning Expense A/C Dr 140
To Cash A/C
(Being office cleaned) 140
29-Jul Accounts Receivable A/C (10*530 + 10*495) 10250
To Sales A/C
(Being goods sold on credit) 10250
30-Jul Laptop A/C Dr 890
To Purchases A/C
(Being laptop taken to be used in office) 890
30-Jul Depreciation A/C Dr 399
To Motor Vehicle A/C 250
To Fixtures and Fittings A/C Dr 125

To Laptop A/C Dr
(Being depreciation charged) 24
30-Jul Telecommunications Expense A/C Dr 850
To Outstanding Telecommunications Expense
(Being Telecommunications Expense
outstanding) 850
30-Jul Electricity Expenses A/C Dr 1900
To Outstanding Electricity Expenses A/C
(Being Electricity Expenses Outstanding) 1900
30-Jul Bad Debts A/C Dr 1714
To Accounts Receivables A/C
(Being debtors recorded as bad debts) 1714
319593 319593
Perpetual Inventory Using FIFO Method
Date Purchases Sales Balance
2-Jul
20 Units *
$890 17800
3-Jul 7 units * $890
14 Units *
$890
22-Jul
10 units *
$890 4 Units * $890
24-Jul 20 Units *
$900
4 Units * $890
20 Units *
$900
30-Jul 1 unit * 890
3 Units * $890
20 Units *
$900
Total 35800 16020 20670

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