Principles of Accounting (BUSS 1003)
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
Brian Nnaji formed the Macdonald Sign Enterprise on October 1, 2016. During the month, the following financial transactions occurred:
| 2016 October |
|
| 1 |
Brian Nnaji invested OR 60,000 in the new business. |
| 2 |
Acquired supply of advertising materials in the amount of OR 20,000 on account. |
| 3 |
Acquired supplies for cash, OR 54,000. (Note: Supplies are charged to expense right away.) |
| 9 |
Received OR 70000 cash for services performed. |
| 10 |
Paid insurance policy OR 4,000. |
| 11 |
Painted signs for Compaj Company on account, OR 160,000 |
| 16 |
Withdrew OR 20,000 for personal use. |
| 23 |
Collected OR40,000 from Bahwan Company. |
| 27 |
Brian Nnaji owes OR 28000 for the month. |
| 31 |
Paid Ooredoo OR10,000 for communication services for the month. |
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. Supply of Advertising
d. Accounts Payable
e. Nnaji, Capital
f. Nnaji, Withdrawal
g. Service Fee Income
h. Supplies Expense
i. Insurance Expense
j. Salary Expense
k. Utility Expense
Q2. Prepare the end-of-month report to account for the incomes and expenses of Macdonald Sign Enterprise under cash basis accounting.
Q3. Prepare the end-of-month report to account for the incomes and expenses of Macdonald Sign Enterprise under accrual basis accounting.
Q4. How does accrual accounting differ from cash basis accounting. The student may define/explain and give example for both cash basis and accrual basis computation of accounting net income.
Instructions for completing the assignment:
1. The assignment must have a cover page indicating the module title, name of student, name of faculty and date of submission.
2. The assignment should have a table of contents, answers to the requirements and appropriate references, if necessary. Use Coventry Harvard style of referencing.
3. The assignment should be done in Word, font size 12, font style Times New Roman, text color black, colors can be used ONLY in appendices; main body of the report should be black and white.
4. Last date of submission: 8th week of the semester. The assignment should be submitted on time through Moodle. Late submission shall be penalized as per the norms of MEC mentioned in the Module