70.2K

Verified Solution

Link Copied!

Alhamoud company is an electronics company that also provide maintenance services on electronics. The company is located in Riyadh. At the beginning of 2021, the ledger of Alhamoud showed Cash of 50,000 SR, opening inventory 6,000 SR (300 units at 10SR per unit) and Owner's Capital of 50,000 SR. (Alhamoud Co. uses the FIFO method in inventory valuation). The following transactions has occurred during the year: 1. The owner of the company invested 120,000 SR cash in the business. 2. Purchased a vehicle from Abdul Latif Jameel for 32,000SR on credit. 3. Paid in advance 2,700 SR cash on a 4-year insurance policy effective January 1. 4. On June 1, Alhamoud purchased 500 units from Alshaya Co. for 15 SR per unit with a settlement discount of 6% if it paid the price within 15 days from the date of purchase. 5. On Septemper 12, Alhamoud purchased 700 units from Alesaei Co., for 17SR per unit with a settlement discount of 5% if it paid the price within 9 days from the date of purchase. 6. On October 3, Alhamoud sold 600 units to Moon and Sun Co. at a price of 30 SR per unit with a settlement discount of 5% if the price is received within 10 days from the date of sale. The company is expecting the customer to take the advantage of the discount. 7. The owner Withdrew 3,000 SR cash for personal use. 8. On June 6, Alhamoud paid the full amount due to Alshaya Co. 9. On October 1, Alhamoud paid the full amount due to Alesaei Co. 10. Paid 50,000 SR cash for employee salaries. PART TWO The following transactions require adjustments in the trial balance. Prepare the adjusted trial balance. 1. The company depreciate the vehicle at 20% straight line. A full year's depreciation is charged in the year of purchase and none in the year of disposal. 2. The insurance expense is relevant for 4 years. 3. Accrued but unpaid employee salaries were 2,000 SR. 4. Alhamoud has a bank deposit in which it receives an interest income of 200SR per month. At year-end, it is found that Alhamoud received 2,000 SR in total. Instructions (for both parts): a) Journalize and post the 2021 transactions. b) Prepare the Statement of Profit or Loss and Statement of Financial Position for the year ending 31 December 2021

Answer & Explanation Solved by verified expert

See Answer