In the beginning of the year 2019, EMR LLC a construction company based in ibri, has made all the arrangements to give a bulk purchase order to their major supplier Sohar Traders a Partnership firm based in Sohar, in order to start a new construction project immediately for a new client. On 1st February 2019 EMR LLC company purchased (goods for credit) materials worth OR.150,000 from SOHAR Traders .But EMR LLC company agreed to pay the full amount only after 4 months ie,on 1st June 2019. From the above scenario, you need to consider the following Two situations. Situation-1 You are recently joined in EMR LLC Company as a junior accountant, and the accounts manager has asked you to do the following tasks. Note: J&P Company is following accrual basis of accounting. a) At what date you need to identify and record the above transaction in the books of accounts, also discuss briefly about how accrual basis of accounting system is used for recording the above transaction. b) Do you think, the credit purchase transaction initially leads to increase the account payable of the business? Yes/No comment briefly on your answer. c) Identify and discuss briefly about the source document, you need to refer before identifying and recording the above credit purchase transaction in the books of accounts.
In the beginning of the year 2019, EMR LLC a construction company based in ibri, has made all the arrangements to give a bulk purchase order to their major supplier Sohar Traders a
On 1st February 2019 EMR LLC company purchased (goods for credit) materials worth OR.150,000 from
SOHAR Traders .But EMR LLC company agreed to pay the full amount only after 4 months ie,on 1st June 2019.
From the above scenario, you need to consider the following Two situations.
Situation-1
You are recently joined in EMR LLC Company as a junior accountant, and the
Note: J&P Company is following accrual basis of accounting.
a) At what date you need to identify and record the above transaction in the books of accounts, also discuss briefly about how accrual basis of accounting system is used for recording the above transaction.
b) Do you think, the credit purchase transaction initially leads to increase the account payable of the business? Yes/No comment briefly on your answer.
c) Identify and discuss briefly about the source document, you need to refer before identifying and recording the above credit purchase transaction in the books of accounts.
Step by step
Solved in 3 steps
