ministry of education and training fpt university subject principle of accounting

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<b>SUBJECT: PRINCIPLE OF ACCOUNTING</b>

<b>MINISTRY OF EDUCATION AND TRAINING FPTUNIVERSITY</b>

<b>SUBJECT: PRINCIPLE OF ACCOUNTING</b>

<b>Individual Assignment</b>

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<b>SUBJECT: PRINCIPLE OF ACCOUNTING...1</b>

<b>I. Introduction:...2</b>

<b>II. Transactions description:...2</b>

<b>III. Transaction analysis:...3</b>

<b>IV. Double-entry:...10</b>

<b>V. General journal:...12</b>

<b>VI. General ledger:...15</b>

<b>VII. Trial Balance:...16</b>

<b>VIII.Income Statement:...16</b>

<b>IX. Statement of Owner’s Equity:...17</b>

<b>X. Balance Sheet:...17</b>

<b>XI. Inconclusion:...17</b>

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competitors in the world, such as Starbucks Coffee (USA), Costa Coffee (U3K), McCafé (Australia and New Zealand), Trung Nguyen Coffee (Vietnam)... However, the demand for customers is getting a rise.

Realizing the growing “Food and Beverage Service”, called the F&B industry, Chow Chow, a young entrepreneur, established a coffee brand, New Star Coffee Company, and set up as a proprietorship, focusing on making coffee-based beverages. The company's development plan in 3 years is to expand 100 stores nationwide. plan in 5 years, NewStar will develop into a popular coffee chain with customers. The marketing plan for businesses is to focus mainly on advertising on social networks, inviting people with influence on experience and use of the product.

<b>II.Transactions description:</b>

Chow Chow launched a new business, New Star Coffee Company, that began operations on December 1. The following transactions were completed by the company during that first month.

On December 1, C. Chow invested $5,000 cash in the company.On December 2, C. Chow purchased $2,000 of dispensing equipment.

On December 5, the company purchased a $1,500 shop-house to use as first store for cash.

On December 8, the company purchased supplies for $1,000 cash.

On December 10, the first store went into operation. First day revenue is $1,000 cash.On December 11, the company bought the second store with $2,000 on credit (using long-term accounts payable).

On December 13, the company received $1,500 cash from the first store's sales. The second store went into operation.

On December 14, the company paid a $1,600 installment towards the principal on the account payable entered into on December 11.

On December 15, second store revenue is $1,500 on account.

On December 16, the company paid $1,000 cash for the salaries of the first store employees.

On December 17, the company received a check for $1,500 from the previous account.On December 20, the company paid $900 cash for the salaries of the second store employees.

On December 21, the company purchased $4,000 of supplies on credit (using note payable).

On December 23, the company received the first store of $ 1,100 cash. The second store in $ 1,900 cash.

On December 25, the company paid utilities for both stores $1,500 cash.

On December 27, the company paid $800 cash for the second store on December 11.On December 31, C. Chow withdrew $950 cash from the company for personal use.

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<b>The chart of accounts:</b>

<b>III.Transaction analysis:</b>

<b>Transaction 1: Investment by Owner</b>

<b>Identify:</b>C. Chow invested $5,000 cash in the company.

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<b>Transaction 3: Purchase Store for Cash</b>

<b>Identify:</b> NewStar spends $1,500 in cash on a shop-house to open its first store.

<b>Transaction 4: Purchase Supplies for Cash</b>

<b>Identify:</b> NewStar uses $1,000 cash to buy coffee supplies from the garden to prepare forthe grand opening.

<b>Post:</b>

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<b>Identify:</b>Thanks to the customer marketing strategy, NewStar had a first-day revenue of $1,500 in cash.

<b>Transaction 6: Purchase Store on Credit</b>

<b>Identify:</b> Chow Chow decided to expand the business by building another store located in the city center. According to economists, Chow Chow arranged to buy the shop house with $2,000 on credit from HSBC bank. Therefore, the company will take interest to pay each month. This results in an increase of $2,000 in assets and liabilities (long-term liabilities) by the same amount. The impact of this is as follows:

<b>Analyze:</b>

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<b>Transaction 7: Provide Services for Cash</b>

<b>Identify: </b>Like transaction 5, NewStar receives an activity report as well as $1,500 in cash. The second store opened on the same day.

<b>Transaction 8: Payment of Accounts Payable</b>

<b>Identify:</b> NewStar pays HSBC $1,600 as partial payment for a previous $2,000 store purchase (transaction 6), with the remaining $400 outstanding.

<b>Analyze:</b>

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<b>Transaction 9: Provide Services for Credit</b>

<b>Identify:</b>After the first day of opening, the second store received $1,500. Analyze:

<b>Transaction 10: Payment of Salaries Expense in Cash</b>

<b>Identify:</b> NewStar pays employees twice a month. The employee's salary at the first storeis $1,000 cash. Wages are expenses, as opposed to assets, as their benefits are used in December (they have no future benefits after December).

<b>Analyze:</b>

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<b>Transaction 11: Receipt of Cash from Accounts Receivable</b>

<b>Identify:</b> NewStar took the profits of the second store (transaction 9) out to $1,500 in cash. This transaction 11 does not change total assets and does not affect liabilities or equity.

<b>Transaction 12: Payment of Utilities Expense in Cash</b>

<b>Identify:</b> Similar to transaction 10, NewStar pays employees at the 2nd store $900 in cash after half a month of work.

<b>Record:</b>

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<b>Transaction 13: Purchase Supplies on Credit</b>

<b>Identify:</b> NewStar needs a fixed supply of coffee to maintain operations. Drai Farm, a large coffee farm, Chow Chow buys them on short-term credit (called note payable).Analyze:

<b>Transaction 14: Provide Services for Cash</b>

<b>Identify:</b> Like transaction 5&7, NewStar receives the first store of $ 1,100 cash. The second store in $ 1,900 cash.

<b>Record:</b>

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<b>Transaction 15: Payment of Utilities Expense in Cash</b>

<b>Identify:</b> NewStar pays utilities (electricity and water bills) for both stores $1,500 cash.

<b>Transaction 16: Payment of Note Payable </b>

<b>Identify:</b>NewStar pays $800 cash for the second store on December 11 (Transaction 13).

<b>Analyze:</b>

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<b>Transaction 17: Withdrawal of Cash by Owner</b>

<b>Identify:</b> C. Chow withdrew $950 cash from the company for personal use.

<b>Post:</b>

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<b>V.General journal:</b>

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<b>VI.General ledger:</b>

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<b>VIII.Income Statement:</b>

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<b>IX.Statement of Owner’s Equity:</b>

<b>X.Balance Sheet:</b>

After one month of operation, NewStar has a net profit of $3,600. The number is quite small compared to the cost, possibly because it is a coffee chain model that needs costs todecorate. In the new coffee chain market, it is difficult to make a high profit at first. Brands need more time to have a fixed customer segment. The total cost ($3,400) is almost half of the profit ($7,000) indicating that the costs incurred are quite high. NewStar needs to review expenses and adjust. In addition, the company also considers marketing strategies such as discounts or gift vouchers for loyal customers. The main purpose is to attract customers to increase profits for the company.

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