Illustration
To illustrate the complete accounting cycle, we will consider the following list of selected transactions. The transactions were completed by Bati Transport in the month of January 2003.
January 1. Ato Yimer took Birr 450,000 from his personal savings and deposited it in the name of Bati transport.
January 2. Bati Transport purchased two used trucks for Birr 150,000 each, on cash.
January 4. Bati Transport received a check for Birr 650 for services given to Alem Trading.
January 4. Received an invoice for truck expenses Birr 90.
January 11. Paid Birr 600 for Awash Insurance Company to buy an insurance policy for its trucks.
January 16. Ato Yimer issued a check for Birr 9,400 to the workers as a salary for two weeks.
January 20. Bati trading Billed Muradu Supermarket for goods transported from Djibouti to Gondar Birr 2,650
January 21. Ato Yimer wrote a check for birr 450 to have one of the trucks repainted
January 21. Bati trading purchased stationary materials and other supplies of Birr 740 on account
January 22. Office equipment of Birr 11,600 is bought on account.
January 23. Purchased an additional truck for Birr 250,000 paying birr 100,000 in cash and issuing a note for the difference.
January 23. Recorded services billed to customers on account birr 14,600.
January 25. Received cash from customers on account Birr 15,000.
January 27. The owner withdrew Birr 500 in cash for his personal use.
January 28. Paid Birr 9,400 to workers as a salary for the last two weeks of the month.
January 30. Paid telephone expense of Birr 95 and electric expenses of Birr 125 for the month.
January 30. Paid other miscellaneous expenses Birr 50.
January 31. Paid Birr 4,000 as a rent for a building used for office space.
These transactions are journalised as follows:
Date Account Title Accounts Debit Credit
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Jan 1 Cash 450,000
Capital 450,000
Jan 2 Trucks 300,000
Cash 300,000
Jan 4 Cash 650
Accounts Receivable 650
Jan 4 Truck Expenses 90
Accounts Payable 90
Jan 11 Prepaid Insurance 600
Cash 600
Jan 16 Salaries Expense 9,400
Cash 9,400
Jan 20 Accounts Receivable 2,650
Service Revenue 2,650
Jan 21 Truck Repainting Expense 450
Cash 450
Jan 21 Supplies Expense 740
Accounts Payable 740
Jan 22 Office Equipment 11,600
Accounts Payable 11,600
Jan 23 Trucks 250,000
Cash 100,000
Notes Payable 150,000
Jan 23 Accounts Receivable 14,600
Service Revenue 14,600
Jan 25 Cash 15,000
Accounts Receivable 15,000
Jan 27 Drawings 500
Cash 500
Jan 28 Salaries Expense 9,400
Cash 9,400
Jan 30 Telephone Expense 95
Cash 95
Jan 30 Utilities Expense 125
Cash 125
Jan 30 Miscellaneous Expense 50
Cash 50
Jan 31 Rent Expense 4,000
Cash 4,000