Question

Question!5 Maxon Ltd. is a new entrant to the market for providing widgets to consumers in Australia As the business commences, various business activities will occur. Exhibit 1 provides a list of the activities that have taken place in the first month of operation. Exhibit 1 - Business Activities for Maxon Ltd. SL Date Business Activit 11 Jan- Maxon deposited $100,000 of his personal funds in a current account 2018at a bank opened in the name of the business. He also provided 4-Jan-18 4-Jan-18 equipment of $50,000, which was paid from his personal account. 2 | | Pay $14,000 to landlord for premises. 50% of the amount is a refundable deposit, the remainder is the first month's rent. | Purchase office equipment for $5,000, of which 40% was paid 3 | instantly. The equipment has an estimated lite of four years with no salvage value 45-Jan-18Borrow $25,000 from a friend for working capital. This interest-free 511-Jan-18Purchase and receive raw materials to manufacture 1,500 widgets at a 614-Jan-18| Wages of $500 were paid as well as an account for electricity, $250 715-Jan-18 |Equipment was purchased at a cost of $16 000, of which $10,000 was 818-Jan-18 Spend $12,000 on TV and radio advertising during the month loan must be repaid in 4 vears. total cost of $15,000. Payment is due in 30-da Assume that these are costs that were incurred for this month so far aid in cash. A loan payable was given for the remainder of $6 000 921-Jan-18Hire a consultant to conduct a survey on the needs of the local community. The assistant works a total of 8 hours, at $30p.h., prior to the end of the month but will not be paid until Februar 1031-Jan-18Delivered 100 widgets at $20 each to the customer on account Using the information provided in Exhibit 1 you are required to do the following [Adjusting entries are not required] i) Following the format in Exhibit 6 (page 51) of your text book, identify the above accounting entries for each business activity ii) Prepare an income statement for Maxon Ltd. for the period 01 January 2018-31 January 2018. Show the detailed elements in income statement. iii) Prepare a balance sheet statement for Maxon Ltd. as at 31 January 2018. Show the detailed elements in balance sheet [5 marks] [3 marks] [3 marks]

Answer 1

Date	Accounts Title	Dr	Cr
01-Jan-18	Cash	100000
	Equipment	50000
	Maxon Capital		150000
04-Jan-18	Rent expenses	7000
	Security Deposit	7000
	Cash		14000
04-Jan-18	Equipment	5000
	Cash		2000
	Accounsts payable		3000
05-Jan-18	Cash	25000
	Loan payable		25000
11-Jan-18	Raw Material Inventory	15000
	Accounts Payable		15000
14-Jan	Wages expenses	500
	Utility Expenses	250
	Cash		750
15-Jan-18	Equipment	16000
	Cash		10000
	Loan payable		6000
18-Jan-18	Advertising expenses	12000
	Cash		12000
21-Jan-18	Salaries expenses	240
	Salaries payable		240
31-Jan-18	Accounts Receivable	2000
	Sales		2000

Income Statement
Sales		2000
Less: Operating Expenses
Rent expenses	7000
Wages expenses	500
Utility Expenses	250
Advertising expenses	12000
Salaries expenses	240	19990
Net Loss		-17990
Balance Sheet
Current Assets
Cash	86250
Accounts Receivbale	2000
Raw Material iNventory	15000
Total current assets	103250
Security Deposit	7000
Equipment	71000
Total Assets	181250
Liabilities & Stockholder equity
Liabilities
Accounts payable	18000
Salaries payable	240
Loan Payable	31000
Total liabilities	49240
Owner equity
Maxon capital (150000-15990)	132010
Total Liabilities & Stockholder equity	181250
If any doubt please comment