Pandora assignment

1

Question:

Here are the transactions for Emmy Enterprise for the month of January 2025:

1. The owner invested ₦150,000 in the business on January 1st.
2. On January 3rd, the business bought inventory worth ₦70,000 on credit.
3. The business paid ₦40,000 for rent on January 5th.
4. The business sold goods worth ₦120,000 (₦80,000 cash, ₦40,000 on credit) on January 10th.
5. The business paid ₦15,000 for electricity bills on January 12th.
6. The business paid ₦20,000 for salaries on January 15th.
7. The business withdrew ₦25,000 for personal use on January 20th.

We are to:

• Prepare a cashbook
• Prepare the ledger accounts for the business
• Prepare a trial balance

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1. Cashbook

The cashbook records all cash transactions, so we will include cash receipts and payments.

Date	Particulars	Cash In (₦)	Cash Out (₦)	Balance (₦)
Jan 1, 2025	Owner’s investment	150,000		150,000
Jan 10, 2025	Goods sold (cash)	80,000		230,000
Jan 12, 2025	Electricity payment		15,000	215,000
Jan 15, 2025	Salary payment		20,000	195,000
Jan 20, 2025	Owner’s withdrawal		25,000	170,000

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2. Ledger Accounts

Cash Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Jan 1, 2025	Owner’s investment	150,000		150,000
Jan 10, 2025	Goods sold (cash)	80,000		230,000
Jan 12, 2025	Electricity payment		15,000	215,000
Jan 15, 2025	Salary payment		20,000	195,000
Jan 20, 2025	Owner’s withdrawal		25,000	170,000

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Inventory Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Jan 3, 2025	Credit purchase (Inventory)	70,000		70,000

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Rent Expense Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Jan 5, 2025	Cash (Rent payment)	40,000		40,000

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Electricity Expense Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Jan 12, 2025	Cash (Electricity payment)	15,000		15,000

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Salaries Expense Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Jan 15, 2025	Cash (Salary payment)	20,000		20,000

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Owner’s Withdrawal Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Jan 20, 2025	Cash (Owner’s withdrawal)	25,000		25,000

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3. Trial Balance

Now, we check if the total debits equal the total credits to ensure the books are balanced.

Account Name	Debit (₦)	Credit (₦)
Cash Account	170,000
Inventory Account	70,000
Rent Expense Account	40,000
Electricity Expense	15,000
Salaries Expense	20,000
Owner’s Withdrawal	25,000
Capital (Owner’s investment)		150,000
Sales (Revenue)		120,000
Accounts Payable (for Inventory)		70,000
Total	340,000	340,000

The trial balance shows that total debits equal total credits, so the books are balanced.

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4. Financial Statements

Income Statement (for the month ended January 31, 2025):

Particulars	Amount (₦)
Revenue (Sales)	120,000
Expenses:
Rent Expense	40,000
Electricity Expense	15,000
Salaries Expense	20,000
Net Profit	45,000

Balance Sheet (as at January 31, 2025):

Assets	Amount (₦)	Liabilities + Owner’s Equity	Amount (₦)
Cash	170,000	Capital (Owner’s investment)	150,000
Inventory	70,000	Accounts Payable (Inventory)	70,000
Total Assets	240,000	Total Liabilities + Owner’s Equity	240,000

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2

Question:

Here are the transactions for XYZ Enterprises for the month of February 2025:

1. On February 1, the owner invested ₦300,000 in cash.
2. On February 3, the business purchased inventory worth ₦120,000 on credit.
3. On February 5, the business sold goods worth ₦150,000 (₦100,000 cash, ₦50,000 on credit).
4. On February 8, the business paid ₦40,000 for rent.
5. On February 10, the business paid ₦8,000 for electricity bills.
6. On February 12, the business paid ₦25,000 for employee salaries.
7. On February 15, the owner withdrew ₦15,000 for personal use.

We are to:

• Prepare the journal entries for each transaction
• Prepare the ledger accounts for the business
• Prepare a trial balance

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1. Journal Entries

1. Owner’s Investment (February 1)

The owner invested ₦300,000 in cash.

Journal Entry:

Date	Account Title	Debit (₦)	Credit (₦)
Feb 1, 2025	Cash	300,000
	Owner’s Capital		300,000

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2. Purchase of Inventory on Credit (February 3)

The business purchased inventory worth ₦120,000 on credit.

Journal Entry:

Date	Account Title	Debit (₦)	Credit (₦)
Feb 3, 2025	Inventory	120,000
	Accounts Payable		120,000

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3. Sale of Goods (February 5)

The business sold goods worth ₦150,000 (₦100,000 in cash, ₦50,000 on credit).

Journal Entry:

Date	Account Title	Debit (₦)	Credit (₦)
Feb 5, 2025	Cash	100,000
	Accounts Receivable	50,000
	Sales Revenue		150,000

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4. Rent Payment (February 8)

The business paid ₦40,000 for rent.

Journal Entry:

Date	Account Title	Debit (₦)	Credit (₦)
Feb 8, 2025	Rent Expense	40,000
	Cash		40,000

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5. Electricity Payment (February 10)

The business paid ₦8,000 for electricity bills.

Journal Entry:

Date	Account Title	Debit (₦)	Credit (₦)
Feb 10, 2025	Electricity Expense	8,000
	Cash		8,000

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6. Salary Payment (February 12)

The business paid ₦25,000 for employee salaries.

Journal Entry:

Date	Account Title	Debit (₦)	Credit (₦)
Feb 12, 2025	Salaries Expense	25,000
	Cash		25,000

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7. Owner’s Withdrawal (February 15)

The owner withdrew ₦15,000 for personal use.

Journal Entry:

Date	Account Title	Debit (₦)	Credit (₦)
Feb 15, 2025	Owner’s Drawings	15,000
	Cash		15,000

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2. Ledger Accounts

Now, let’s post these journal entries into the ledger.

Cash Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Feb 1, 2025	Owner’s Capital	300,000		300,000
Feb 5, 2025	Sales (Cash)	100,000		400,000
Feb 8, 2025	Rent Payment		40,000	360,000
Feb 10, 2025	Electricity Payment		8,000	352,000
Feb 12, 2025	Salary Payment		25,000	327,000
Feb 15, 2025	Owner’s Drawings		15,000	312,000

Accounts Receivable Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Feb 5, 2025	Sales (Credit Sale)	50,000		50,000

Inventory Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Feb 3, 2025	Purchase (Inventory)	120,000		120,000

Accounts Payable Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Feb 3, 2025	Inventory (Credit Purchase)		120,000	120,000

Sales Revenue Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Feb 5, 2025	Sales (Goods sold)		150,000	150,000

Rent Expense Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Feb 8, 2025	Cash (Rent Payment)	40,000		40,000

Electricity Expense Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Feb 10, 2025	Cash (Electricity Payment)	8,000		8,000

Salaries Expense Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Feb 12, 2025	Cash (Salary Payment)	25,000		25,000

Owner’s Drawings Account:

Date	Particulars	Debit (₦)	Credit (₦)	Balance (₦)
Feb 15, 2025	Cash (Owner’s Withdrawal)	15,000		15,000

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3. Trial Balance

Now, let’s prepare the trial balance to ensure that everything is in balance.

Account Name	Debit (₦)	Credit (₦)
Cash	312,000
Accounts Receivable	50,000
Inventory	120,000
Accounts Payable		120,000
Sales Revenue		150,000
Rent Expense	40,000
Electricity Expense	8,000
Salaries Expense	25,000
Owner’s Drawings	15,000
Owner’s Capital		300,000
Total	570,000	570,000

The trial balance shows that total debits equal total credits, so the books are balanced.

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4. Financial Statements

Income Statement (for the month ended February 28, 2025):

Particulars	Amount (₦)
Revenue (Sales)	150,000
Expenses:
Rent Expense	40,000
Electricity Expense	8,000
Salaries Expense	25,000
Net Profit	77,000

Balance Sheet (as at February 28, 2025):

Assets	Amount (₦)	Liabilities + Owner’s Equity	Amount (₦)
Cash	312,000	Owner’s Capital	300,000
Accounts Receivable	50,000	Accounts Payable	120,000
Inventory	120,000	Owner’s Drawings	15,000
Total Assets	482,000	Total Liabilities + Equity	482,000

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And that’s how the journal entries, ledger accounts, trial balance, and financial statements would look for XYZ Enterprises.

3

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Question: List the accounts that make up the financial statements.

The financial statements are important tools in accounting that help businesses understand their financial performance and position. There are different accounts that make up these financial statements. Here’s a breakdown of the main ones:

1. Income Statement (Profit and Loss Statement)

This statement shows whether the business made a profit or loss over a period of time, like a month or a year. It shows the company’s revenues and expenses.

Accounts in the Income Statement:

• Revenue (Sales): This is the total money the business earns from selling goods or services. For example, when a business sells products, this money is recorded here.
• Cost of Goods Sold (COGS): This account shows the direct costs of making or acquiring the products that were sold, like materials or wages for workers who made the products.
• Expenses: These are the costs that help run the business, like rent, electricity, salaries, or office supplies.
• Net Profit or Loss: This is the difference between revenue and expenses. If revenue is higher than expenses, the business made a profit. If expenses are higher than revenue, the business made a loss.

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2. Balance Sheet (Statement of Financial Position)

The balance sheet shows the business’s financial position at a specific point in time. It has three main parts: assets, liabilities, and owner’s equity.

Accounts in the Balance Sheet:

• Assets: These are things that the business owns and can use to make money, like cash, buildings, inventory (goods for sale), and equipment.
  • Current Assets: These are things the business expects to turn into cash or use up within a year. Examples include cash, accounts receivable (money customers owe), and inventory.
  • Non-Current Assets: These are long-term assets, like land, buildings, and equipment, that will be used for many years.
• Liabilities: These are debts or things the business owes to others.
  • Current Liabilities: Debts that need to be paid within a year, like accounts payable (money the business owes to suppliers) or short-term loans.
  • Non-Current Liabilities: Debts that are due after more than a year, like long-term loans or bonds.
• Owner’s Equity: This represents the owner’s share in the business. It’s basically the difference between the business’s assets and liabilities.
  • Owner’s Capital: The money the owner has invested in the business.
  • Retained Earnings: Profits the business has made over time, which are reinvested into the business instead of being paid out.

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3. Cash Flow Statement

This statement tracks the flow of cash in and out of the business. It helps the business know if it has enough cash to pay its bills and run its operations. It is divided into three parts:

• Operating Activities: Cash flows from the business’s core activities, like selling goods and paying for expenses.
• Investing Activities: Cash flows related to buying or selling long-term assets, like land or equipment.
• Financing Activities: Cash flows from borrowing money, paying off loans, or issuing shares.

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4. Statement of Changes in Owner’s Equity (or Retained Earnings)

This statement shows how the owner’s equity has changed over a period of time. It includes:

• Net Profit or Loss from the income statement.
• Owner’s Contributions (additional money the owner puts into the business).
• Owner’s Drawings (money the owner takes out of the business for personal use).

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In Summary:

• Income Statement: Includes Revenue, COGS, Expenses, and shows Net Profit or Loss.
• Balance Sheet: Includes Assets (Current and Non-Current), Liabilities (Current and Non-Current), and Owner’s Equity.
• Cash Flow Statement: Shows cash from Operating, Investing, and Financing activities.
• Statement of Changes in Owner’s Equity: Shows changes in the owner’s equity, including Net Profit, Owner’s Contributions, and Owner’s Drawings.

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