Assignment Task:
Learning outcomes to be achieved by completion of the assessment:
1. Record income and receipts from credit customer, purchases, expenditures and payments to supplier.
2. Differentiate between accrual and cash basis accounting.
CASE STUDY -
Mr. Qais started the business during the month of Feb 2020. The business named, Majestic Computers sells all kinds of electronic items including laptop computers, printer, scanner, desktop computers etc. During the month of Feb 2020, the following financial transactions occurred:
Feb 2020 Transaction details -
Feb 1 Mr. Qais invested OMR 25,000 to start the business.
Feb 3 Paid rent OMR 1,000.
Feb 5 Purchased office furniture for business use on credit from Fahmy Furniture worth OMR 5,000.
Feb 6 Purchased electronic goods for cash worth OMR 10,000.
Feb 7 Purchased office computer and software for business worth OMR 2,000 for cash.
Feb 10 Purchased electronic goods on credit from Arabia Traders worth OMR 10,000.
Feb 12 Sold goods for cash - OMR 3,000.
Feb 15 Sold goods for credit to MM Mobile Shop worth OMR 20,000.
Feb 17 Paid Fahmy Furniture OMR 5,000 for office furniture purchased on 5th Feb.
Feb 18 Paid Arabia Traders OMR 5,000 for electronic goods purchased on 10th Feb.
Feb 20 Paid salaries OMR 600.
Feb 22 Paid Arabia Traders OMR 4,000 for electronic goods purchased on 10th Feb.
Feb 24 Withdrew drawings OMR 500.
Feb 26 Received cash from MM Mobile Shop OMR 3,000 for sales mentioned on 15th Feb.
Feb 28 Paid Arabia Traders OMR 1,000 for electronic goods purchased on 10th Feb.
Feb 29 Paid Insurance expenses OMR 500.
Requirements - Now that you have reviewed the case study above, respond to the following requirements on your own.
Q1. Record each of the above transactions in general journal including the explantion/narration. Use the following account titles to journalize the transactions Majestic Computers:
a. Cash
b. Capital
c. Rent
d. Furniture
e. Accounts Payables
f. Purchases
g. Computer & Software
h. Sales
i. Accounts Receivables
j. Salaries
k. Drawings
l. Insurance expenses
Q2. Prepare the end-of-month report to account for the incomes and expenses of Majestic Computers under Cash basis accounting.
Q3. Prepare the end-of-month report to account for the incomes and expenses of Majestic Computers under Accrual basis accounting.
Q4. Discuss FIVE differences between cash and accrual accounting based on review of relevant literature. The student may identify and discuss by giving examples for both cash basis and accrual basis of accounting from the case study provided above.
Note - The assignment should have a title page, table of contents, answers to the requirements and appropriate references and citations. All resources should be cited using CU Harvard style.
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