After several months of planning. Haris Qavi started a haircutting business called The Cutlery. The following events occurred during its first month: • On August 1, Qavi put Rs. 30,000 cash into a checking account in the name of The Cutlery. He also invested Rs. 150,000 of equipment that he already owned • On August 2, he paid Rs. 6,000 cash for furniture for the shop • On August 3, he paid Rs.5,000 cash to rent space. • On August 4, he furnished the shop by some old equipment and some new equipment that he bought on credit for Rs. 12,000. This amount is to be repaid in three equal payments at the end of August, September, and October. • On August 5, The Cutlery opened for business. Receipts from cash sales in the first week and a half of business (ended August 15) were Rs.8,250. • On August 17, Qavi paid Rs.1,250 to an assistant for working during the grand opening. • On August 18, Sold goods for Rs. 5,000. • Cash receipts from sales during the second half of August were Rs. 9,300. • On August 31, Qavi paid an installment on the account payable • On August 31, He drew Rs.9,000 cash for his personal use. Required Arrange the following asset, liability and owner’s equity titles in a table similar to the accounting equation. Explain each of the changes in owner’s equity.
Question No.1
After several months of planning. Haris Qavi started a haircutting business called The Cutlery. The following
events occurred during its first month:
• On August 1, Qavi put Rs. 30,000 cash into a checking account in the name of The Cutlery. He also
invested Rs. 150,000 of equipment that he already owned
• On August 2, he paid Rs. 6,000 cash for furniture for the shop
• On August 3, he paid Rs.5,000 cash to rent space.
• On August 4, he furnished the shop by some old equipment and some new equipment that he bought
on credit for Rs. 12,000. This amount is to be repaid in three equal payments at the end of August,
September, and October.
• On August 5, The Cutlery opened for business. Receipts from cash sales in the first week and a half of
business (ended August 15) were Rs.8,250.
• On August 17, Qavi paid Rs.1,250 to an assistant for working during the grand opening.
• On August 18, Sold goods for Rs. 5,000.
• Cash receipts from sales during the second half of August were Rs. 9,300.
• On August 31, Qavi paid an installment on the account payable
• On August 31, He drew Rs.9,000 cash for his personal use.
Required
Arrange the following asset, liability and owner’s equity titles in a table similar to the
Explain each of the changes in owner’s equity.
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