Question

I need to do T - Accounts for this case. Please help

In February 2009, Mr. Alan Pickering contracted to purchase a mineral spring in the Missouri Ozarks. The property, known locally as Verona Springs, included a 6 million gallon-per-day spring that produced exceptionally pure water. Mr. Pickering planned to bottle the water and sell it in the nearby cities of Springfield, Columbia, St. Louis, and Kansas City. On March 1, 2009, Mr. Pickering and several relatives purchased 500,000 shares in the company for $1 per share. On that same day, the corporation borrowed $300,000 from the local bank. The banknote required five annual $60,000 principal repayments beginning March 1, 2010. Interest payments of 6% of the outstanding balance on the previous March 1 were required on March 1 of each year, also beginning March 1, 2010. The firm then wrote a check for $525,000 to buy the 65 acres of land that included Verona Springs. The water was nearly free of pollutants, but it arose into a small pond before flow- ing to a nearby stream. In the pond, the water was exposed to falling leaves and other contaminants. To maintain purity, Mr. Pickering hired a local firm to drill a flowing artesian well near the spring (in a flowing artesian well, pressure from an underground aquifer forces water to flow naturally to the surface). The company paid $1,000 cash for the drilling on March 10, 2009. Mr. Pickering expected the well to last at least 10 years before redrilling would be needed. During March, Verona Springs had a building constructed above and around the well. Inside the building, the firm installed filtration, purification, and bottling equipment and a holding tank. The company paid the $240,000 cost by check on March 31, 2009, when the equipment became operational. The firm expected the building and equipment to last 10 years. On April 5, the firm purchased a truckload of 18,200 one- gallon plastic water bottles and lids for $3,200, and 3,100 shipping boxes for $3,100 ($1.00 per box). The $6,300 for those purchases was payable in 30 days. During April, the firm also purchased miscellaneous supplies for $500 and paid in cash. The firm began bottling water by hiring three local residents to work part-time. During April, they bottled and shipped 18,000 gallons of mineral water (3,000 cases that each contained six 1-gallon bottles). Verona sold the 3,000 cases to regional supermarkets for $5.00 per case. One chain paid for 1,000 cases by check upon receipt; the others purchased on account, payable in 30 days. In late April, the firm paid the three employees a total of $1,500 in cash for their work and also paid a trucking firm $900 in cash to deliver the water. On April 30, the firm had negligible quantities of bottles, lids, boxes, and supplies in inventory.

Answer 1

Hi,

Statement of Profit/Loss for the period ended 30 Apr 2009 Balance Sheet Particulars Share Capital Resere and Surplus Borrowings Creditor Interest Accrued Amount 500,000 1,421 300,000 6,300 3,000 Particulars Land Building Bank Raw Material Prepaid expenses Supplies Debtors Amount 525,000 238,000 36,100 135 986 500 10,000 Particulars Amount Particulars Amount Sales Inventory Purchases Water Box Salary Depreciation Interest Other eHpenses Profit 15,000 135 3,200 3,100 1,500 2,000 3,000 914 1.421 15,135 810,721 810,721 15,135 Depreciation on Building Depreciation Balance as on 30 Apr 2009 240000 2000 238000 Bank Account Particulars Share Capital Inflow Outflo 500000 300000 Land Equipment Drilling Supplies Sales 240000 1000 500 5000 1500 900 805000 768900 Trucking 36100

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