Question

Analyzing Transactions and Adjustments using the Financial Statement Effects Template On March 1, S. Penman launched AniFoods Inc., an organic foods retailing company. Following are the transactions for its first month of business. 1. S. Penman contributed $180,000 cash to the company in return for common stock. Penman also lent the company $99,000. This $99,000 note is due one year hence. 2. The company purchased equipment in the amount of $90,000, paying $18,000 cash and signing a note payable to the equipment manufacturer for the remaining balance. 3. The company purchased inventory for $144,000 cash in March. 4. The company had March sales of $180,000, of which $108,000 was for cash and $72,000 on credit. Total cost of goods sold for its March sales was $126,000. 5. The company purchased future advertising time from a local radio station for $18,000 cash. 6. During March, $13,500 worth of radio spots purchased in transaction 5 are aired. The remaining spots will be aired in April. 7. Employee wages earned and paid during March total $30,600 cash. 8. Prior to disclosing the financial statements, the company recognized that employees had earned an additional $1,800 in wages that will be paid in the next period. 9. The company recorded $3,600 of depreciation for March relating to its equipment. a. Record the effect of each transaction using the financial statement effects template. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. Income Statement Expenses Noncash Assets Earned Capital Revenues = Net Income Transaction 1. Cash Asset 279000 Balance Sheet Liabilities 99000 Notes Payable 72000 Notes Payable Contrib. Capital 180000 Common Stock Cash N/A • N/A N/A 2. -18000 Cash N/A N/A N/A + N/A 3. -144000 = Cash N/A N/A N/A • N/A N/A 4. 108000 180000 126000 = 54000 Cash N/A 90000 = N/A 144000 = Inventory 72,000 = Accounts Receivable -126000 Cost of Goods Sold 18000 Prepaid Advertising -13500 = Advertising Expense N/A N/A N/A Sales N/A 5. -18000 Cash N/A + N/A N/A N/A 6. -13500 N/A N/A N/A N/A * N/A 7. -30600 -30600 Wages Expense N/A N/A N/A N/A N/A 13500 = Advertising Expense 30600 = Wages Expense 1800 = Wages Expense 3600 = Depreciation Expense - 8. -1800 N/A N/A 1800 Wages Payable 3600 Depreciation Expense - N/A N/A N/A + 9. N/A 3600 • N/A -3600 N/A N/A N/A Retained Earnings b. Prepare a March income statement and a balance sheet as of the end of March for AniFoods Inc. Note: Do not use negative signs with your answers.

Answer 1

	Balance Sheet									Income Statement
Transaction	Cash Asset	+	Non Cash Asset	=	Liabilities	+	Cont. Capital	+	Earned Capital	Revenues	-	Expenses	=	Net Income
1)	$ 2,79,000.00				$       99,000.00		$    1,80,000.00
	Cash				Notes Payable		Common Stock
2)	$    -18,000.00		$                  90,000.00		$       72,000.00
	Cash		Equipment		Notes Payable
3)	$ -1,44,000.00		$               1,44,000.00
	Cash		Inventory
4)	$ 1,08,000.00		$                  72,000.00						$          1,80,000.00	$           1,80,000.00				$ 1,80,000.00
	Cash		Accounts Receivable						Retained Earnings	Sales
			$             -1,26,000.00						$        -1,26,000.00			$           1,26,000.00		$ -1,26,000.00
			Inventory						Cost of Goods sold			Cost of Goods sold
5)	$    -18,000.00		$                  18,000.00
	Cash		Prepaid Ad.
6)			$                 -13,500.00						$           -13,500.00			$              13,500.00		$    -13,500.00
			Ad. Expense						Ad. Expense			Ad. Expense
7)	$    -30,600.00								$           -30,600.00			$              30,600.00		$    -30,600.00
	Cash								Wages Expense			Wages Expense
8)					$         1,800.00				$              -1,800.00			$                1,800.00		$      -1,800.00
					Wages Payable				Wages Expense			Wages Expense
9)			$                   -3,600.00						$              -3,600.00			$                3,600.00		$      -3,600.00
			Accumulated Dep.						Depreciation			Depreciation
Total	$ 1,76,400.00		$              1,80,900.00		$   1,72,800.00		$   1,80,000.00		$               4,500.00	$          1,80,000.00		$          1,75,500.00		$        4,500.00

Income Statement
Sales			$ 1,80,000.00
Cost of Goods sold			$ 1,26,000.00
Gross Profit			$    54,000.00
Depreciation Expense			$      3,600.00
Wages Expense			$    32,400.00
Advertising Expense			$    13,500.00
Net Income			$      4,500.00

Balance Sheet
Cash			$ 1,76,400.00	Wages Payable			$      1,800.00
Accounts Receivable			$    72,000.00	Notes Payable (to owner)			$    99,000.00
Inventory			$    18,000.00	Notes Payable (to vendor)			$    72,000.00
Prepaid Advertising			$      4,500.00	Total Liabilities
Net PPE			$    86,400.00
				Common Stock			$ 1,80,000.00
				Retained Earnings			$      4,500.00
Total Assets			$3,57,300.00	Total Liabilities and Equity			$3,57,300.00

Hey, is this okay? Please let me know. Thank you