Kochi Service was formed on May 1,2020. The following transactions took place during the first month (amounts in thousands) Transactions on May 1: Rahul Shah invested ₤40,000 cash in the company in exchange for ordinary shares. Hired two employees to work in the warehouse. They will each paid a salary of ₤3,050 per month. Signed a 2-year rental agreement on a warehouse; paid ₤24,000 cash in advance for the first year Purchase furniture and equipment costing ₤30,000. A cash payment of ₤10,000 was immediately; the remainder will be paid in 6 months. Paid ₤1,800 cash for a one-year insurance policy on the furniture and equipment Transactions during the remainder of the month: Purchased basic office supplies for ₤420 cash. Purchased more office supplies for ₤1,500 on account. Total revenues earned were ₤20,000 - ₤8,000 cash and ₤12,000 on account Paid ₤400 to suppliers for accounts payable due. Received ₤3,000 from customers in payment of accounts receivable. Received utility bills in the amount of ₤380, to be paid next month. Paid the monthly salaries of the two employees, totaling ₤6,100 Instructions Prepare journal entries to record each of the events listed. (Omit explanations.) Post the journal entries to T-accounts. Prepare a trial balance as of May 31, 2020

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Kochi Service was formed on May 1,2020. The following transactions took place during the first month (amounts in thousands)

Transactions on May 1:

Rahul Shah invested ₤40,000 cash in the company in exchange for ordinary shares.
Hired two employees to work in the warehouse. They will each paid a salary of ₤3,050 per month.
Signed a 2-year rental agreement on a warehouse; paid ₤24,000 cash in advance for the first year
Purchase furniture and equipment costing ₤30,000. A cash payment of ₤10,000 was immediately; the remainder will be paid in 6 months.
Paid ₤1,800 cash for a one-year insurance policy on the furniture and equipment

Transactions during the remainder of the month:

Purchased basic office supplies for ₤420 cash.
Purchased more office supplies for ₤1,500 on account.
Total revenues earned were ₤20,000

- ₤8,000 cash and ₤12,000 on account

Paid ₤400 to suppliers for accounts payable due.
Received ₤3,000 from customers in payment of accounts receivable.
Received utility bills in the amount of ₤380, to be paid next month.
Paid the monthly salaries of the two employees, totaling ₤6,100

Instructions

Prepare journal entries to record each of the events listed. (Omit explanations.)
Post the journal entries to T-accounts.
Prepare a trial balance as of May 31, 2020

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