PGP I year IIM Amritsar

Accounting Recording System (ARS)

Case 4-4: Waltham Oil and Lube Center, Inc.

List of business transactions that had happened during the month of May to July at the Waltham Oil and Lube Center.

1. Mr. Frank Knight invested 40,000 cash as a capital in the business2. The amount of 40,000 is deposited with National Oil and Lube Centers3. Furniture worth 6,000 purchased on cash4. Mr. Knight invested additional capital of 10,000 in cash5. Insurance payments of 1,200 paid for 12 months 6. 35,450 deducted from Deposit account towards Oil and grease inventory (6,320),

Operating supplies and uniforms (4,130) and Equipment cost (25,200)7. On May 1, 1,500 is paid towards lease payment which was otherwise deducted from

Deposit8. Out of 75,000 worth of Equipment cost, 25,200 is deducted towards his deposit and

remaining amount is treated as a interest free loan from National of worth 49,8009. Bank account shows a record of 108,600 deposits of revenue which come from day to

day operations includes 105,300 from Service revenue and 3,300 from parking revenue10. 8,230 of oil and grease inventory purchased during the this period11. 34,560 is paid towards salaries to all the employees12. 1,700 is paid for utilities 13. 6,600 is paid for miscellaneous payments14. 26,400 is paid towards lease rentals includes both fixed and variables components15. 2,490 is paid towards repayment of loan from National i.e. 830 for 3 months16. 4,500 is withdrawn by Mr Knight for his personal consumption17. Mr Knight found that 340 is due for collection towards accounts receivables from parking

services18. He also found that 730 is receivable from a local merchant towards services19. He could realize that 2,100 is due for payment towards salaries to employees20. He also found that 350 is outstanding for utilities payment 21. Cost of sales for the period are found to be 9,260 (i.e. Beginning of inventory 6320 plus

purchases during the period 8,230 out of which available for consumption minus the ending inventory is 5,290)

22. During this period, depreciation of 150 charged for Furniture (i.e. 6,000/10 years divided by 1/4 months)

23. During this period, depreciation of 3, 750 charged for Equipment (i.e.75,000/5 years divided by 1/4 months)

24. Advance revenue received from a customer of 400 towards next month parking services i.e. Accrued Parking Revenue or Deferred parking revenue

25. Out of 1,200 insurance payment, 300 pertaining to this period is recorded as an expense

Questions: I. Record the Journal entries and Ledger accountsII. Balance all the Ledger accounts III. Prepare Trial Balance, Income Statement and Balance sheet.

PGP I year IIM Amritsar

- The complete assignment to be submitted to Mr Johan by tomorrow 11.30 am through Class Coordinator, Ms. Vandita

Accounting Recording System (ARS)

Case 4-4: Waltham Oil and Lube Center, Inc.

List of Accounts to be prepared

1. Cash 2. Capital3. Deposit with National4. Furniture5. Prepaid Insurance6. Oil and grease inventory7. Operating supplies and uniforms8. Equipment9. Lease payments10. Interest free loan from National11. Services Revenue12. Parking Revenue13. Salaries14. Utilities15. Miscellaneous expenses16. Withdrawal 17. Accounts receivable – Parking Revenue18. Accounts receivable – Services Revenue19. Salaries payable20. Utilities payable21. Depreciation on Furniture22. Depreciation on Equipment23. Accumulated Depreciation24. Advance Parking Revenue or Deferred parking revenue25. Insurance expense