4. Amal Automotive Company experienced the following accounting events during 2019. Received S60,000 cash from the issue of common stock. Performed services for $35,000 cash. Purchase land for $16,000 cash. Borrowed $1,000 cash from the Bank. Paid $24,000 cash for salary expenses. Sold land for $19,000 cash. Paid $20,000 cash on the loan from state bank. Paid $12,800 cash for salary expense. Paid a cash dividend of $15,000 to the stockholders Required: a. Pass general journal entries and post the entries, to T-accounts and determine the ending balance in each account. b. Prepare a statement of cash flows. Assume Amal Automotive had a beginning cash balance of $10,000.
Answers
Journal Entries with relevant T-Accounts and Cash Flow Statement
Explanation:
In the Books of Amal Automative Company
Journal Entries:
- Cash A/c Dr. Rs.$60,000
To ShareCapital A/c $60,000
(Being cash received for issuing common stock)
- Cash A/c Dr. $35,000
To Service Revenue A/c $35,000
(Being Cash received for Services performed)
- Land A/c Dr. $16000
To Cash A/c $16000
(Being Land purchased)
- Cash A/c Dr. $1,000
To Bank Loan A/c $1,000
(Being Bank loan acquired)
- Salaries and Wages A/c Dr.$24000
To Cash A/c $24,000
(Being Salaries paid)
- Cash A/c Dr. $19,000
To Land A/c $16000
To P&L A/c $3,000
(Being Land sold and profit transferred to P&L A/c)
- Bank Loan A/c Dr. $20,000
To Cash A/c $20,000
(Being Bank Loan paid)
- Salary and Wages A/c Dr. $12,800
To Cash A/c $12,800
(Being Salaries paid)
- Dividend Payable A/c Dr. $15000
To Cash A/c $15,000
(Being Dividends paid to shareholders)
Ledgers:
Cash A/c
Particulars Amount($) Particulars Amount($)
To Balance b/d 10,000
To Share 60,000 By Land A/c 16000
Capital A/c By Salaries A/c 24000
To Service 35,000 By Bank 20,000
Revenue A/c Loan A/c
To Bank 1000 By Salaries A/c 12,800
Loan A/c By Shareholder 15000
To Land A/c 19000 A/c
By Balance c/d 37200
125000 125000
ShareCapital A/c
Particulars Amount($) Particulars Amount($)
To Balance c/d 60000 By Cash A/c 60,000
60000 60000
Service Revenue A/c
Particulars Amount($) Particulars Amount($)
To Balance c/d 35000 By Cash A/c 35000
35000 35000
Land A/c
Particulars Amount($) Particulars Amount($)
To Cash A/c 16000 By Cash A/c 19000
To P&L A/c 3000
19000 19000
Bank Loan A/c
Particulars Amount($) Particulars Amount($)
To Cash A/c 20000 By Cash A/c 1000
By Balance c/d 19000
20000 20000
Salaries A/c
Particulars Amount($) Particulars Amount($)
To Cash A/c 12800 By Balance c/d 36800
To Cash A/c 24000
36800 36800
P&L A/c
Particulars Amount($) Particulars Amount($)
To Balance c/d 3000 By Land A/c 3000
3000 3000
Dividend Payable A/c
Particulars Amount($) Particulars Amount($)
To Cash A/c 15000 By Balance c/d 15000
15000 15000
Cash Flow Statement:
Cash Flow Statement
as at 31/--/2019
Particulars Amount($)
Cash from Operating Activities:
Salaries Paid (24000)
Salaries Paid (12800)
Service Revenue 35000
Cash From Operating Activities (1800)
(A)
Cash From Investing Activities:
Land purchased (16000)
Land sold 16000
Profit on sale of land 3000
Cash from Investing Activities 3000
(B)
Cash from Financing Activities:
Issue of Common stock 60000
Bank Loan acquired 1000
Bank Loan Paid (20000)
Dividends paid (15000)
Cash from Financing Activities 26000
(C)
Cash from all activities 27,200
( A + B + C)
Add: Opening cash Balance 10,000
Closing Stock 37200