Question

The transactions relating to the formation of Blue Co. Stores Inc., and its first month of operations follow. a. The firm was organized and the stockholders invested cash of $8,100. b. The firm borrowed $5,300 from the bank; a short-term note was signed. c. Display cases and other store equipment costing $1,700 were purchased for cash. The original list price of the equipment was $1,980, but a discount was received because the seller was having a sale. d. A store location was rented, and $1,300 was paid for the first month's rent. e. Inventory of $14,200 was purchased; $8,400 cash was paid to the suppliers, and the balance will be paid within 30 days. 1. During the first week of operations, merchandise that had cost $4,900 was sold for $5,700 cash. g. 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. h. Additional inventory costing $4,250 was purchased; cash of $1,250 was paid, and the balance is due in 30 days. 1. In the last three weeks of the first month, sales totaled $14.750, of which $9,600 was sold on account. The cost of the goods sold totaled $8,400. J. Employee wages for the month totaled $1,900; these will be paid during the first week of the next month. k. The firm collected a total of $3,150 from the sales on account recorded in transaction i. 1. The firm paid a total of $4,800 of the amount owed to suppliers from transaction e. Required: a. Record each transaction in the appropriate columns. Indicate the financial statement effect. b. Calculate the total assets, liabilities, and stockholders' equity at the end of the month and calculate the amount of net income for the month. c. After completing parts a through I prepare an income statement for Blue Co. Stores Inc. for the month presented and a balance sheet at the end of the month.

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Part a Accounts Receivable Notes Equipment Payable Accounts Payable Retained Earning Event Cash Inventory Paid in capital Revenue Expense $ 8,100 $ 5,300 $ 1,700 $ $ $ $ $ $ 8,100 5,300 (1,700) (1,300) (8,400) 5,700 $ (1,300) $ 5,800 14,200 (4,900) $ 5,700 $ $ (4,900) (110) $ $ 110 3,000 $ $ (1,250) 5,150 $ 9,600 $ 4,250 (8,400) $ 14,750 $ $ (8,400) (1,900) $ 1,900 $ (3,150) $ $ 3,150 (4,800) $ (4,800) Total $ 9,950 $ 6,450 $ 5,150 $ 1,700 $ 5,300 $ 6,010 $ 8,100 $ - $ 20,450 $ (16,610) Part b Cash Accounts Receivable Inventory Equipment Total Assets $ $ $ $ $ 9,950 6,450 5,150 1,700 23,250 Assets: Cash Accounts Receivable Inventory Equipment Total Assets $ $ $ $ $ 9,950 6,450 5,150 1,700 23,250 Note Payable Accounts Payable Total Liabilities $ $ $ 5,300 6,010 11,310 Liabilities: Note Payable Accounts Payable Total Liabilities $ $ $ 5,300 6,010 11,310 Paid in capital Revenue Expense Total Equity $ $ $ $ 8,100 20,450 (16,610) 11,940 Owner's Equity: Paid in capital Retained Earning Total Owner's Equity Total Liabilities and Equity $ $ $ $ 8,100 3,840 11,940 23,250 Revenue Expense Net Income $ $ $ 20,450 (16,610) 3,840