Question

The transactions relating to the formation of Blue Co. Stores Inc., and its first month of operations follow.

1. The firm was organized and the stockholders invested cash of $7,300.
2. The firm borrowed $5,200 from the bank; a short-term note was signed.
3. Display cases and other store equipment costing $1,550 were purchased for cash. The original list price of the equipment was $1,970, but a discount was received because the seller was having a sale.
4. A store location was rented, and $1,500 was paid for the first month's rent.
5. Inventory of $14,100 was purchased; $9,400 cash was paid to the suppliers, and the balance will be paid within 60 days.
6. During the first week of operations, merchandise that had cost $4,600 was sold for $5,300 cash.
7. A newspaper ad costing $110 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month.
8. Additional inventory costing $4,200 was purchased; cash of $1,150 was paid, and the balance is due in 30 days.
9. In the last three weeks of the first month, sales totaled $14,500, of which $9,900 was sold on account. The cost of the goods sold totaled $8,300.
10. Employee wages for the month totaled $1,900; these will be paid during the first week of the next month.
11. The firm collected a total of $3,250 from the sales on account recorded in transaction i.
12. The firm paid a total of $4,700 of the amount owed to suppliers from transaction e.

Required:

1. Record each transaction in the appropriate columns. Indicate the financial statement effect.
2. Calculate the total assets, liabilities, and stockholders' equity at the end of the month and calculate the amount of net income for the month.
3. After completing parts a through l, prepare an income statement for Blue Co. Stores Inc. for the month presented and a balance sheet at the end of the month.

Check my work Complete this question by entering your answers in the tabs below. Required A Required B Required C1 Required C2 10 points Record each transaction in the appropriate columns. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a nega eBook Transaction ASSETS Accounts + Receivable + = LIABILITIES STOCKHOLDERS' EQUITY Notes Accounts Paid-in Retained + Equipment = Payable + Payable + Capital + Earnings + Revenue - Expenses Merchandise Inventory Hint Print Cash 7,300 5,200 (1,550) References 5,300 (1,150) 4,600 (3,250) 3,250 (4,700) 18,250 + (3,250) + 0 0 + 0 + 0 + 0 + 0

Answer 1

a.		Assets				Liability		Shareholder Equity
	Transaction	Cash	Account Recievable	Inventory	Equipment	Note Payable	Account Payable	Paid in capital	retained earning	Revenue	Expenses
	a	7,300						7,300
	b	5,200				5,200
	c	(1,550)			1,550
	d	(1,500)									(1,500)
	e	(9,400)		14,100			4,700
	f	5,300		(4,600)						700
	g						110				(110)
	h	(1,150)		4,200			3,050
	i	4,600	9,900	(8,300)						14,500	(8,300)
	j						1,900				(1,900)
	k	3,250	(3,250)
	l	(4,700)					(4,700)
	Total	7,350	6,650	5,400	1,550	5,200	5,060	7,300	-	15,200	(11,810)

b.	Assets	20,950
	Liability	10,260
	Share Holders Equity	7,300
	net Income	3,390
c.	Income Stament
	Revenue
	Sales	14500
	Profit on sale during first week	700
	Total Revenue	15200
	Less: Cost of Goods sold	-8300
	Less: Expenses
	Rent	-1500
	Advertisement	-110
	Wages	-1900
	Total Expenses	-11810
	Net Profit	3390
d.	Balance Sheet
	Assets
	Fixed Assets
	Equipment	1550
	Cash	7350
	Account Recievable	6650
	Inventory	5400
	Total Current Assets	19400
	Total Assets	20950
	Liability
	Share Holders Equity	7,300
	Retained Earning	3,390
	Note Payable	5200
	Account Payable	5060
	Total Liability	20,950
e.	Liability
	Note Payable	5200
	Account Payable	5060
	Total Liability	10260
	Share Holders Equity	7,300
	Retained Earning	3,390
	Total Share Holders Equity	10690
	Total Liability & Share Holders Equity	20950