This accounting problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
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Here are the journal entries for the remaining transactions in Chuma's Hardware for May 2018. Step 1: Journalize the transaction for May 5, 2018. Bought a new motor vehicle for Sh 1,600,000 from Mwalimu Motors Ltd, paying Sh 600,000 in cash and the balance to be settled in equal monthly installments. Accounts affected: Motor Vehicle (Asset), Cash (Asset), and Mwalimu Motors Ltd (Liability - Creditor). Rules: Increase in asset (Motor Vehicle) is debited. Decrease in asset (Cash) is credited. Increase in liability (Mwalimu Motors Ltd) is credited. Calculations: Balance due to Mwalimu Motors Ltd = Sh 1,600,000 - Sh 600,000 = Sh 1,000,000. |l|l|l|l| Date & Particulars & Debit (Sh) & Credit (Sh) \\ May 5, 2018 & Motor Vehicle Account & 1,600,000 & \\ & To Cash Account & & 600,000 \\ & To Mwalimu Motors Ltd Account & & 1,000,000 \\ & (Being purchase of motor vehicle, part cash, part credit) & & \\ Step 2: Journalize the transaction for May 12, 2018. Sold some old furniture for Sh 30,000 to Mwangaza school on credit. Accounts affected: Mwangaza School (Asset - Debtor) and Furniture (Asset). Rules: Increase in asset (Mwangaza School) is debited. Decrease in asset (Furniture) is credited. |l|l|l|l| Date & Particulars & Debit (Sh) & Credit (Sh) \\ May 12, 2018 & Mwangaza School Account & 30,000 & \\ & To Furniture Account & & 30,000 \\ & (Being sale of old furniture on credit) & & \\ Step 3: Journalize the transaction for May 25, 2018. Chuma the owner brought in her personal computer valued at Sh 35,000 to be used by the business. Accounts affected: Office Equipment/Computer (Asset) and Capital (Equity). Rules: Increase in asset (Office Equipment/Computer) is debited. Increase in owner's equity (Capital) is credited. |l|l|l|l| Date & Particulars & Debit (Sh) & Credit (Sh) \\ May 25, 2018 & Office Equipment Account & 35,000 & \\ & To Capital Account & & 35,000 \\ & (Being owner's contribution of personal computer to business) & & \\ 3 done, 2 left today. You're making progress.