Question

Jim’s Shoes is a sole owner and has paid in capital and borrowed money to start his business. He has cash, inventory and a car, as well as, office supplies, shelves and a sign. He owes is shoe supplier some money for his inventory and has a bank loan. Each month he sells a few shoes on credit and has to pay his one employee, as well as, rent, the electric bill and water bill.

During his first month of operations, Jim invests $400 in his company in cash, Jim borrows $500 from his mom, Jim buys 6 pairs $300 worth of shoes on credit from his supplier, Jim pays $200 for rent, Jim buys a car on bank credit for $1,000, Customer Bob buys 1 pair of shoes for $100, Jim buys a sign for $50, and 10 Shelves $10 each, Jim pays the water bill $25 and electric $35, Jim hired Don and paid him $50 to sell his shoes, Jim prepaid $60 for insurance, the annual premium on credit

From the following transactions form a balance sheet and income statement.

1-Mar Cash    $400

Owner Equity    $400

2-Mar Cash    $500

   AP-Mom $50

3-Mar Inventory    $300

   AP-Nike    $300

4-Mar Rent Expense    $200

   Cash    $200

5-Mar Automobile $1000

   Auto Loan $1000

6-Mar Cash    $100

Sales Revenue $100

6-Mar COGS    $50

   Inventory    $50

7-Mar    Fixtures    $150

   Cash    $150

8-Mar    Utilities $60

Cash $60

9-Mar    Wages/Salaries Expense    $50

   Cash    $50

10-Mar Prepaid Insurance    $60

AP-Insurance    $60

30-Mar Insurance Expense    $5

Prepaid Insurance $5

Answer 1

	Income Statement
	Sales Revenue			$ 100.00
Less:	Expenses:
	COGS			$    50.00
	Rent Expense			$ 200.00
	Utilities Expense			$    60.00
	Wages and Salaries Expense			$    50.00
	Insurance Expense			$      5.00
		Net Income		$(265.00)

Balance Sheet
Assets			Liabilities
Cash		$     540.00	Accounts Payable		$     860.00
Inventory		$     250.00	Auto Loan		$ 1,000.00
Automobile		$ 1,000.00
Fixtures		$     150.00	Owner's Equity		$     135.00
Prepaid Insurance		$       55.00
		$ 1,995.00			$ 1,995.00