Question

INSTRUCTIONS
A. Prepare a tabular summary of transactions
B. Formulate the income statement, retained earnings statement and balance sheet as

of September 31st, 2018

Information:

After 2 years of managing a established business, INNO reports an annual growth margin of 38%; for the term ended in September 31st, 2018, they reported the following transactions:

1. Stockholders invested $10,000 in cash in exchange for common stock of INNOmuebles

2. Paid $800 for July rent on office space.

3. Purchased office equipment on account $3,000.

4. Sold various merchandise (furniture) to clients for cash $1,500.

5. Borrowed $700 cash from a bank on a note payable.

6. Sold office furniture to a specific client on account $2,000.

7. Paid monthly expenses: salaries $500, utilities $300, and advertising $100.

Answer 1

A. Prepare a tabular summary of transactions

			Table for Summary of transactions
S.No	Transactions			Assets				=	Liability		+		Capital
		Cash/Bank	+	Stock	+	Debtors	Total		Loan	+	Accounts payable	Total
1	Investment	10000	+	0	+	0	10000	=	0	+	0	0	10000
2	Purchase of Stock	0	+	830	+	0	830	=	0	+	3000	3000	-2170
3	Sales on cash	1500	+	0	+	0	1500	=	0	+	0	0	1500
4	Rent	-800	+	0	+	0	-800	=	0	+	0	0	-800
5	Borrowing	700	+	0	+	0	700	=	700	+	0	700	0
6	Sales on account	0	+	0	+	2000	2000	=	0	+	0	0	2000
7	Salary	-500	+	0	+	0	-500	=	0	+	0	0	-500
8	Utilites	-300	+	0	+	0	-300	=	0	+	0	0	-300
9	Advertisement	-100	+	0	+	0	-100	=	0	+	0	0	-100
		10500	+	830	+	2000	13330	=	700	+	3000	3700	9630

B. Formulate the income statement, retained earnings statement and balance sheet as

of September 31st, 2018

Income statement as at September 30, 2018
Particulars	Amount	Particulars	Amount
To Purchase	3000	By Sales
		-Cash	1500
To Gross Margin	1330	-on account	2000
		By Closing stock	830
	4330		4330
To Salary	500	By Gross Margin	1330
To Utilites	300
To Advertisement	100
Net profit	430

Retained earning as at September 30, 2018
Particulars	Amount
Opening Balance	Nil
Profit during the period	430
Closing Balance	430

Balance sheet as on September 30, 2018
Liability/Capital	Amount	Assets	Amount
Capital	9630	Cash	10500
Accounts payable	3000	Stock	830
Loan	700	Debtors	2000
	13330		13330

Answer 2

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