Service provider provides different services like legal, real estate, communications, storage, processing etc.
Service providers do not sell products; therefore, there are not:
Purchase of goods and purchase return.
Sales of goods and sales return.
Suppliers or creditors.
Discount received and discount allowed.
Application service provider Audit service provider Cleaning service provider Cloud storage service provider Commission based service provider Cyber security service provider Data storage service provider Gardening service provider Internet service provider Legal service provider Management service provider Motivation service provider |
Network service provider Online service provider Payment service provider Pest control service provider Security service provider Software service provider Software service provider in cloud computing Taxation service Telecommunications service provider Website development service provider Website hosting and domain provider etc. |
PROBLEM: 10 Service Firm Shareholders’ Equity
EP Online Study LLC has the following transaction for the month of March:
(a) Invested Rs 200,000 to start a business and converted into 20,000 common stock @ Rs 10.
(b) Purchases office equipment on account for Rs 35,000, payment due within the month.
(c) Receives Rs 40,000 cash in advance from a customer for services not yet rendered.
(d) Provides bill of Rs 55,000 for services to a customer and bill received.
(e) Pays Rs 3,000 utility bills (electricity, internet and mobile expenses) with cash.
(f) Distributed Rs 1,000 cash in dividends to stockholders.
(g) Insurance for one year is Rs 600 which includes advance insurance Rs 550.
(h) Salary paid to assistant Rs 3,000 and still payable Rs 1,000.
Required: Accounting equation in expended form
[Answer: Assets = 232,400; 35,000; 55,000; 550;
SHE = 200,000; RE = 46,950; Liabilities = 35,000; 40,000; 1,000]
SOLUTION
Accounting Equation
Particulars |
ASSETS |
= |
SH EQUITY |
+ |
LIABILITIES |
|||||||||||||
|
Cash |
+ |
Equip |
+ |
A/R |
+ |
Adv |
|
Capital |
+ |
RE |
|
A/P |
+ |
Adv Rev |
+ |
Payable |
|
a |
Invested into business |
200,000 |
|
0 |
|
0 |
|
0 |
= |
200,000 |
|
0 |
+ |
0 |
|
0 |
|
0 |
|
First equation |
200,000 |
+ |
+0 |
+ |
0 |
+ |
0 |
= |
200,000 |
+ |
0 |
|
0 |
+ |
0 |
+ |
0 |
b |
Office equipment (credit) |
0 |
|
+35,000 |
|
0 |
|
|
|
0 |
|
0 |
|
+35,000 |
|
0 |
|
0 |
|
New equation |
200,000 |
+ |
35,000 |
+ |
0 |
+ |
0 |
= |
200,000 |
+ |
0 |
+ |
35,000 |
+ |
0 |
+ |
0 |
c |
Service revenue (in advance) |
+40,000 |
|
0 |
|
0 |
|
|
|
0 |
|
0 |
|
0 |
|
+40,000 |
|
0 |
|
New equation |
240,000 |
+ |
35,000 |
+ |
0 |
+ |
0 |
= |
200,000 |
+ |
0 |
+ |
35,000 |
+ |
40,000 |
+ |
0 |
d |
Service provided on credit |
0 |
|
0 |
|
+55,000 |
|
|
|
0 |
|
+55,000 |
|
0 |
|
0 |
|
0 |
|
New equation |
240,000 |
+ |
35,000 |
+ |
55,000 |
+ |
0 |
= |
200,000 |
+ |
55,000 |
+ |
35,000 |
+ |
40,000 |
+ |
0 |
e |
Utility bill paid |
-3,000 |
|
0 |
|
0 |
|
|
|
0 |
|
–3,000 |
|
0 |
|
0 |
|
0 |
|
New equation |
237,000 |
+ |
35,000 |
+ |
55,000 |
+ |
0 |
= |
200,000 |
+ |
52,000 |
+ |
35,000 |
+ |
40,000 |
+ |
0 |
f |
Dividend distributed |
-1,000 |
|
0 |
|
0 |
|
|
|
0 |
|
-1,000 |
|
0 |
|
0 |
|
0 |
|
New equation |
236,000 |
+ |
35,000 |
+ |
55,000 |
+ |
|
= |
200,000 |
+ |
51,000 |
+ |
35,000 |
+ |
40,000 |
+ |
0 |
g |
Insurance and advance |
(600) |
|
0 |
|
0 |
|
550 |
|
0 |
|
(50) |
|
0 |
|
0 |
|
0 |
|
New equation |
235,400 |
+ |
35,000 |
+ |
55,000 |
+ |
550 |
= |
200,000 |
+ |
50,950 |
+ |
35,000 |
+ |
40,000 |
+ |
0 |
h |
Salary paid and still payable |
(3,000) |
|
0 |
|
0 |
|
0 |
|
0 |
|
(4,000) |
|
0 |
|
0 |
|
1,000 |
|
Final equation |
232,400 |
+ |
35,000 |
+ |
55,000 |
+ |
550 |
= |
200,000 |
+ |
46,950 |
+ |
35,000 |
+ |
40,000 |
+ |
1,000 |
All incomes, expenses, profit and loss are adjusted in retained earnings (RE) in limited company. Other rules are same as Expanded Accounting Equation: Service Firm Sole Proprietorship For more details click here: https://eponlinestudy.com/expanded-accounting-equation-service-firm-sole-proprietorships/
|
#######
Click on link for YouTube videos topic wise : |
|
Accounting Equation |
|
Basic Journal Entries in Nepali |
|
Basic Journal Entries |
|
Journal Entry and Ledger |
|
Ledger Account |
|
Subsidiary Book |
|
Cash Book |
|
Trial Balance and Adjusted Trial Balance |
|
Bank Reconciliation Statement (BRS) |
|
Depreciation |
|
Click on link for YouTube videos chapter wise: |
|
Financial Accounting and Analysis (All videos) |
|
Accounting Process |
|
Accounting for Long Lived Assets |
|
Analysis of Financial Statement |
#####
PROBLEM AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
EP Online Study LLC has the following transaction for the month of April:
(a) Invested cash Rs 100,000 into business and converted into common stock of 1,000 shares @ Rs 100 each.
(b) Promissory note issued to take loan Rs 40,000.
(c) Equipment purchased in cash Rs 20,000.
(d) Purchase insurance policy in advance in cash Rs 8,000.
(e) Service provided in cash Rs 100,000.
(f) Service provided on account Rs 50,000.
(g) Service revenue received in advance Rs 20,000.
(h) Office expenses paid Rs 10,000.
(i) Office supplies purchased worth Rs 5,000.
(j) Office supplies purchased on account (credit) Rs 15,000
(k) Dividend distributed Rs 10,000.
Required: Accounting equation in expended form
[Answer: Assets = 207,000; 20,000; 50,000; 20,000; 8,000;
Shareholders’ equity = 100,000; RE = 130,000; Liabilities = 40,000; 20,000; 15,000]
***********
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