Principle of Accounts

by Powell

The question below was obtained from a May 2011 past paper

Mikail Jack is a music artiste. On March 31, 2011, he provided the following about his assets and liabilities.

He owns recording equipment valued at $40,000

He also owns musical instruments worth $15,000

He owns a car , which was bought at a cost of $65 000. The car was bought with the help of a five-year loan of $30 000 from Easy Finance Company. Accumulated depreciation as at March 31,2011 is $18 000

There is an inventory of pre-recorded CDs on hand, valued at $5 700

He sold $300 worth of his pre-recorded CDs to a fan who promise to pay in April 2011

The Cancer society owes him $8 000 for performing at a public function

He paid $650 in advance to Star Advertising Company which is working on his new advertising campaign.

He holds a bank account of $8 925 and has petty cash of $50

He owes $2 500 in interest charges on a loan from Easy Finance Company

He rents a recording audio studio for $1 500 per month- three months ‘ rent remains unpaid at March 31, 2011

Prepare a classified statement of Financial Position ( Balance Sheet) for Mikail Jack, as at March 31, 2011 (Use the order of performance in classifying assets).

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