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Ass.1

On January 3, 2017, Ale Hab, an ex-manager of the CBE Bole Branch, established his

own consultancy business. He named his business "AH Consultancy Services". The objective of the business is to render financial consultancy services to clients on a fee basis. Belows are business activities occurred during the first month of operation of the firm (3 to 31 of January, 2017).

1       Alemu deposited $20,000 cash in a bank account in the name of his business - AH Consultancy Services (Deposit slip # 1). He has $250,000 cash in his personal bank account with Dashen Bank and $50,000 cash in a safe deposit box at home. 

2       Alemu transferred furniture worth $30,000 from his home for office uses by AH Consultancy Services (Asset receipt note #1). He also has extra home furniture, residential house and personal car worth $620,000, $800,000 and $360,000, respectively. 

3       Alemu purchased office supplies worth $5,000 from various suppliers agreeing to pay the sum within two weeks (Purchase invoice #1). Two-fifth of the supplies will be used for personal purposes while the remaining is for use by AH. Three-fifth of the liability is arranged to be settled from business cash sources. 

4       AH received $20,000 cash for consultancy services it rendered to a cash client (Cash sales invoice #1).

5       AH paid $3,000 cash for advertising aired through ETV (Cash payment voucher #1).

6       AH forecasted that services fees in the next two weeks will amount to $5,000.

7       AH received $10,000 additional cash investment from its owner (Cash receipt note #1).

8       AH rendered consultancy services worth $15,000 to clients who promised to pay the sum within a month (Credit sales invoice #1). 

9       AH sold one of the furniture invested by its owner for $5,000 cash (Cash receipt note #2). The furniture had a recorded value of $5,000.

10   AH collected $5,000 cash from clients who received services in item-8 above (Cash receipt note #3). 

11   AH paid $2,000 cash to suppliers on credit (Cash payment voucher #2).

12   AH purchased a used car for business purposes. The business paid $8,000 cash for the car (Cash payment voucher #3). Brokers estimated that the car currently worth only $5,000 and the Inland Revenue assessed the car at $12,000 for property tax purposes.

13   AH borrowed $4,000 cash from Dashen Bank (Cash receipt note #4). The loan is repayable over ten months. 

14   AH employed an accountant and a secretary for monthly salary of $1,200 and $700, respectively (Employment contract #2 and #4).

15   AH incurred and paid for the following expenses(Cash payment voucher #4) 

·       Wages.................................................   $6,000

·       Rent....................................................    4,500

·       Utilities................................................   1,200

·       Others..................................................      800

16   AH determined that cost of supplies remained on hand at the end of the current month total $1,300 (Supplies inventory report #1).

17   AH paid $450 cash to Dashen Bank consisting of $400 principal and $50 one month interest on part of the loan due in January (Cash payment voucher #5). 

18   AH paid its owner $5,000 cash to pay house utility expenses (Cash payment voucher #6).


Required:

a)     Analyze and record the above events in the financial records of AH Consultancy Services

b)     And prepare financial statements for the business for the month of January 2017.


Ass. 2

On March 1, 2002, Tahir, a famous businessman in Addis, opened a business named "Universal Garage" which is organized as a sole proprietorship. The business renders car repair, maintenance and related services for fees. Below are selected transactions completed by Universal Garage in March 2002 and its chart of accounts.


a) Transactions

Mar 1 Received the following assets from its owner, Tahir:

                       Cash....................................... Br, 8,300

                       Supplies .................................     2,000

                       Office Equipment...................   10,000

            2 Borrowed Br 5,000 from Dashen Bank

 3 Paid Br 1,800 for rent on a building leased for business purposes

            3 Purchased welding and other repair machinery for Br 3,600 cash

            4 Paid Br 200 for a radio advertisement

            8 Sold for Br 200 cash an old office equipment with a recorded cost of Br 200

           13 Paid weekly salary Br 1,200

           16 Received Br 4,400 from services rendered on cash 

           20 Paid weekly salary Br 1,200

           20 Received Br500 royalties for idle repair machinery it leased to other businesses  

           20 Delivered service on credit, Br 6,000

21 Purchased additional repair machinery on account for Br 2,000 from Sámi-Engineers

           23 Received Br 5,000 additional cash investment from its owner

24 Repaid Br 1,000 bank loan and paid Br 100 interest on bank loan

26 Purchased supplies for Br 800 cash

           27 Paid Br 100 for customer entertainment and other items

27 Paid weekly salary Br 1,200

           31 Paid Br 500 for electricity and other utilities consumed during the month

31 Received Br 4,200 cash from credit customers   

31 Paid Tahir Br 1,800 for personal uses


b) Chart of accounts

Universal Garage

Chart of Accounts

100 ASSETS

 110 CURRENT ASSETS

   111 Cash

   112 Accounts Receivable

   114 Supplies

   116 Prepaid Rent

   117 Prepaid Insurance

 120 PLANT ASSETS

  121 Land

  123 Machinery

  123.1 Accumulated Depreciation-Machinery

  125 Office Equipment

125.1                       Accumulated Depreciation-Office Equipment


200 LIABILITIES

 210 CURRENT LIABILITIES

   211 Account Payable

   213 Salaries Payable

   216 Interest Payable

 220 NON-CURRENT LIABILITIES

  221 Long-term Bank Loan

300 OWNER'S EQUITY

      301 Tahir, Capital

      302 Tahir, Drawings

      303 Incomes Summary


400 REVENUES

       401 Fees Earned

       410 Other Income


500 EXPENSES

       501 Salary Expenses

       502 Supplies Expenses

       503 Rent Expenses

       504 Insurance Expenses

       505 Depreciation Expenses

       506 Interest Expenses

       510 Miscellaneous Expenses

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