Question

The Ortiz Company The Ortiz Company, a wholesale distributor of home appliances, began business on July 1, 20XX. The following summarized transactions occurred during July. 1. Ortiz's stockholders contributed $250,000 in cash in exchange for their common stock. 2. On July 1, Ortiz signed a 1-year on a warehouse, paying $60,000 cash in advance for occupancy of 12 months 3. On July 1, Ortiz acquired warehouse equipment for $100,000. A cash down payment of $40,000 was made, and a note payable was signed for the balance. 4. On July 1, Ortiz paid $24,000 cash for a 2-year insurance policy covering fire casualty, and related risks. 5. Ortiz acquired assorted merchandise for $35,000 cash 6. Ortiz acquired assorted merchandise for $190,000 on open account. 7. Total sales were $200,000, of which $30,000 were for cash 8. Cost of inventory sold was S160,000 9. Rent expense was recognized for the month of July. 10. Depreciation expense of $2,000 was recognized for the month. 11. Insurance expense was recognized for the month. 12. Collected $35,000 from credit customers 13. Disbursed $80,000 to trade creditor:s For simplicity, ignore all other possible expenses Required 1. Prepare an income statement. Prepare a balance sheet for July 31, 20XX 2.

Answer 1

1. Income statement of Ortiz company

2. Balance sheet of Ortiz company as at 31st July, XXXX

Particulars 1-Apr-2018 to 31-Jul-2018 Particulars 1-Apr-2018 to 31-Ju-2018 Opening Stock Sales Accounts 1,70,000.00 Merchadise Goods Merchandise Sales 1,70,000.00 Purchase Accounts 2,25,000.00 Closing Stock 65,000.00 Merchandise Purchases 2,25,000.00 Merchadise Goods 65,000.00 Gross Profit clo 10,000.00 2,35,000.00 2,35,000.00 Indirect Expenses 8,000.00 Gross Profit b/f 10,000.00 Depreciation on Equipment Insurance Rent on Warehouse 2,000.00 1,000.00 5,000.00 Indirect Incomes Nett Profit 2,000.00 Total 10,000.00 TotaI 10,000.00