Problem#

A newly setup organization Mobile Co that plans to sell cell phones. You are required to
carry out the financial accounting entries for the first month of operation February 2016.
The following transactions took place.

Date Transactions
Feb 1 Started business with $ 10,000,000 in Bank Account.
Feb 1 Purchased a Laptop for $ 70,000 paying via Cheque.
Feb 1 Purchased 2 Peachtree Financial Accounting Licenses at the rate of $ 250,000 each.
The price for the license is per annum and is paid upright in advance.
Feb 1 Purchased a Shop Premises in busy market place for $ 3,000,000. The entire amount
was paid directly upfront from the bank. The shop was valued as $ 2,500,000 for the
shop while $ 500,000 for the fixtures installed already.
Feb 2 Purchased the first consignment of Cellphones from Bari Co for $ 5,000,000 by
paying 20% amount through Cheque, rest on credit.
Feb 2 Withdrew $ 100,000 from the bank to keep in Cash Till in the shop.
Feb 2 Purchased a Motor Vehicle by paying $ 500,000 out of the bank and a bank loan of $
700,000.
Feb 3 Paid the first monthly installment of Bank Loan of $ 20,000 out of the bank.
Feb 4 Inaugurated the shop with the first day’s sale of $ 60,000. All sales were on cash
basis.
Feb 5 The Cash sales for the day were $ 125,000.
Feb 5 $ 250,000 of cash was deposited to the bank account.
Feb 5 $ 10,000 was spent in shop daily expenses of printing and stationery items.
Feb 6 The Cash sales for the day were $ 230,000.
Feb 6 Cash of $ 200,000 was deposited to the Bank account.
Feb 7 The Cash sales for the day were $ 55,000.
Feb 7 A customer returned a faulty cellphone to Mobile Co. The owner refunded the
cellphone amount of $ 15,000 from the cash. The same cellphone had costed $
12,000 to Mobile Co. The cellphone was returned to Bari co and the amount was
adjusted against the payable.
Feb 9 Paid $ 2,000 for weekly cleaning of shop.
Feb 9 The Cash sales for the day were $ 25,000.
Feb 10 The Cash sales for the day were $ 135,000.
Feb 10 Deposited $ 100,000 cash to the bank account.
Feb 11 The Cash sales for the day were $ 165,000.
Feb 12 The Cash sales for the day were $ 125,000.
Feb 12 Deposited $ 200,000 cash to the bank account.
Feb 13 The Cash sales for the day were $ 140,000.
Feb 15 Paid a cheque of $ 2,000,000 to Bari Co.
Feb 15 The Cash sales for the day were $ 120,000.
Feb 16 Withdrew $ 50,000 from the bank for personal use.
Feb 16 The Cash sales for the day were $ 30,000.
Feb 17 Deposited $ 200,000 cash into the bank account.
Feb 17 The Cash sales for the day were $ 15,000.
Feb 18 Paid $ 30,000 cash for advertisements in local area newspapers and magazines.
Feb 18 Paid for cleaning expenses of shop premises of $ 5,000 out of cash.
Feb 21 The Cash sales for the day were $ 10,000.
Feb 21 Made a donation of $ 2,000 out of cash.
Feb 22 A contract was made on the first day with a local area hotel for providing daily lunch
and collecting money on monthly basis. The bill for the month of February was $
22,000. The owner settled the entire amount with a cheque.
Feb 22 The Cash sales for the day were $ 6,000.
Feb 23 The Payroll was processed on fortnightly basis. The amount due for the first 15 days
of the month was $ 75,000. Cheques were issued on Feb 23 to settle the entire
amount in full.
Feb 23 The owner had a credit card specifically for the purpose of Shop Fuel Expenses. The
card’s bill was amounting to $ 90,000 and was settled in full with a cheque.
Feb 23 Owner’s daughter arrived in an emergency and the owner paid her $ 5,000 out of
cash.
Feb 23 The Cash sales for the day were $ 75,000.
Feb 24 Deposited $ 50,000 cash into the bank account.
Feb 24 The Cash sales for the day were $ 195,000.
Feb 25 Paid a cheque of $ 500,000 to Bari Co.
Feb 26 The Cash sales for the day were $ 225,000.
Feb 27 Deposited $ 125,000 into the bank account.
Feb 27 Withdrew $ 50,000 out of cash for personal use.
Feb 28 The Cash sales for the day were $ 136,000.
Feb 28 Paid for the monthly Utility Expenses of $ 75,000.
Feb 29 The Company had a straight line depreciation policy as follows:
For Shop Premises: @ 5% per annum
For Equipment &Fixtures: @ 20% per annum
For Motor Vehicles: @ 25% per annum
Feb 29 Salaries due for the second fortnight of February were $ 75,000. No payment was
made on the month end.
Feb 29 The closing inventory of Cell phones was evaluated at $ 4,000,000.