Course Name: Accounting and Financial Management | ACC5502

QUESTION 1 (20 marks total)

On 1st May 2017 Lady MaMa started a mobile massage business. Lady MaMa employs two (2) staff. The following transactions were completed during the first month of operation:

2017

1 May

Lady MaMa transferred $5,000 from her personal bank account to the business bank account to start operations.

2 May

The business purchased a motor vehicle by taking out a bank loan. The motor vehicle cost $7,500.

5 May

Purchased office equipment for $1,200 on credit.

10 May

The business banked $4,700 cash received from providing massage services.

12 May

Paid salaries and wages $1,800.

17 May

Received the telephone bill, $45.

19 May

Invoiced customers for services performed during the week, $1,100.

24 May

Lady MaMa took $750 cash from the business bank account for her own personal use.

26 May

Paid for the office equipment purchased on 5 May.

31 May

Salaries of $2,900 remain unpaid at the end of the month for work performed by the employees during the month of May.

Part A:

Show the effects of each of the following transactions on the accounts of Lady MaMa.

Provide your answer on the attached worksheet. Indicate the amount for all the transactions.

****Please remove the worksheet from this examination paper and attach to the examination answer booklet provided****

(13 marks)

Check balance – total bank balance = $5,950, total profit = $1,055

Part B:

Prepare an Income Statement for Lady MaMa for the month ending 31 May 2017.