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 quipment of $50,000, which was paid from his personal account. 2 | 4-Jan-18 | Pay $14,000 to landlord for premises. 50% of the amount is a refundable deposit, the remainder is the first month's rent. 3 | 4-Jan-18 | Purchase office equipment for $5,000, of which 40% was paid instantly. The equipment has an estimated life of four years with no salvage value 45-Jan-18Borrow $25,000 from a friend for working capital. This interest-free loan must be repaid in 4 vears. 511-Jan-18Purchase and receive raw materials to manufacture 1,500 widgets at a total cost of $15,000. Payment is due in 30-da 614-Jan-18| Wages of $500 were paid as well as an account for electricity, $250 Assume that these are costs that were incurred for this month so far 715-Jan-18 |Equipment was purchased at a cost of $16 000, of which $10,000 was aid in cash. A loan payable was given for the remainder of $6 000 818-Jan-18 Spend $12,000 on TV and radio advertising during the month 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 [5 marks] ii) Prepare an income statement for Maxon Ltd. for the period 01 January 2018-31 January [3 marks] iii) Prepare a balance sheet statement for Maxon Ltd. as at 31 January 2018. Show the [3 marks] accounting entries for each business activity 2018. Show the detailed elements in income statement. detailed elements in balance sheet

Please only answer part iii) Prepare a balance sheet statement for Maxon Ltd. as at 31 January 2018. Show the detailed elements in the balance sheet.

Answer 1

LIABILITIES Capital Accounts 1,50,000 Fixed Assets 70110 P & L Account (19,880) Current Assets 6,000 Closing Stock Loan Payable 14000 Current Liabilities & Provisions Cash in hand & bank 88010 Sundry Creditors 18,000 Borrowing Other Current Assets 7000 Total 179120

1. Depreciation has been taken @5% for One Quarter Approx. Calculation taken
2. Closing stock calculated at historical /book value @10 per widgets
3. Purchase has been assume unpaid till making of balance sheet