Accounting

Prepare the performance analysis, using the expanded accounting equation (table 1), to
show the effects of following transactions on the business financial value.
1- On 1-1-2023, Ronald and Daivid had each invested SAR 100,000 in exchange for
common stock in the business ( Named Cloud-link).
2. On 2-1-2023, Cloud-link purchased laptops and other hardware equipment worth SAR
50,000, half paid for in cash, with the remaining balance due in 2 months. The
useful life of this equipment was estimated to be four years.
3- On 3-1-2023, Cloud-link purchased different hardware for sale: total value SAR 20,000
4- On 4-1-2023, Cloud-link hired two developers for a monthly salary of SAR 30,000 each.
5- On 4-1-2023, Cloud-link rented a facility with rent paid upfront for two years, SAR
40,000.
6- On 10-5-2023, Cloud-link sold hardware for SAR 10,000 cash, which cost them SAR
7,500
7- On 1-7-2023, Cloud-link received SAR 12,000 from Fast-tech, a local client, for Software
Services expected to be completed by July 31, 2024
8- On 15-10-2023 The founders developed their own software to analyse social media
postings – at cost SAR 20,000 in terms of R&D (60:40)
9- On 30-12-2023, Cloud-link provided cloud services during the period were worth SAR
1,200,000. Of this, SAR 800,000 were collected in cash, while SAR 400,000 was still
outstanding.
10- On 30-12-2023, Cloud-link performed services worth SAR20,000 that were not billed to
clients on or before 31-12-2023.
Table (1): Expanded accounting equation
No
1
2
3
4
5
6
7
8
9
Assets
= Liabilities
+ Equity
2- After all entries have been analysed, prepare Cloud link trial balance on
the form provided in table (2).
Table (2): Cloud link Trial Balance
Account
Cash
Account /
Receivables
Inventory
Prepaid Rent
Equipment
Software
Account/ Payable
Share capital
Unearned Revenue
Service Revenue
Sales revenue
Cost of Goods Sold
Research expense
Total
A
L+E
Use the adjusted trial balance of Cloud-link at 31-12-2023 to communicate its
performance in the Income Statement and Balance Sheet Format.
Account
Cash
Account / Receivables
Inventory
Prepaid Rent
Equipment
Software
Account/ Payable
Share capital
Unearned Revenue
Service Revenue
Sales revenue
Cost of Goods Sold
Research expense
Rent Expense
Depreciation expense
Accumulated depreciation
Salaries Expense
Salaries/ Payable
Total
A
L+E
Cloud-link Income Statement 31-12-2023
Revenues
Service revenue
Sales revenue
Total revenues
Cost of Sales & Service
Cost of Good Sold
Cost of Service- Salary
Gross Profit
Operating Exp
Rent expense
Depreciation exp.
Research expense
Total expenses
EBIT
Interest & Tax exp.
Net income
Cloud-link Financial Position on 31-12-2023
Assets
Cash
Accounts Receivable
Prepaid Rent
Inventory
Equipment
Software
Accumulated Depreciation
Total assets
Liabilities & Equity
Accounts Payable
Salaries Payable
Unearned Revenue
Share capital
Retained Net Income
Total liabilities & Equity