Question

Problem 3-6 Fred Klein started his own business recently. He began by depositing $5,000 of his own money (equity) in a business account. Once he'd done that his balance sheet was as follows. Liabilities and Assets Equity Cash $5,000 Equity $5,000 Total Assets $5,000 Total $5,000 During the next month, his first month of business, he completed the following transactions. (All payments were made with checks out of the bank account.) Purchased $4,000 worth of inventory, paying $1,500 down and owing the vendor the remainder . Used $450 of the inventory in making product. . Paid employees' wages on the last day of the month of $1,100 Sold all the product made in the first month on credit for $3,000 Paid rent of $1,300 a. Construct a balance sheet for Fred's business at the end of its first month. (Hint: Fred's business has only current assets, current liabilities, and an equity account. Calculate the ending balance in each of the current accounts from the information given. The ending equity account balance will be the difference between the current assets and liabilities at month end.) Enter all amounts as positive numbers. ASSETS LIABILITIES Cash Payables Receivables Current Liabilities Current Equity Assets

Answer 1

Following information provided to us about Fred's business -

Opening cash balance - $ 5,000

Opening Equity - $ 5,000

Transactions of first month.

Please refer to below spreadsheet for calculations and answer of (a) and (b)

Formula Reference -

Please refer to below spreadsheet for calculation and answer of (c) , (d) , (e)

Formula reference -