Question

i) Capital stock issued:                                                        $20,000

ii) Office equipment bought (and paid for in cash):        $1,500

iii) Production consumables purchased in cash:            $1,200           

iv) Raw material purchased (on credit):                            $3,000

v) Production machinery purchased Long Term Note: $8,000

vi) Sale of finished goods (in cash)                                   $8,700

vii) Sale of finished goods (on credit)                               $3,100

viii) Utilities (paid in cash):                                                  $1,200

ix) Wages and salaries paid in cash to employees:       $2,500

x) Part payment to supplier (toward transaction iv)        $1,000

You are required to:

(1) Summarize and post the above transactions.

(2) Prepare an income statement for the transactions during month of March.

(3) Prepare a balance sheet as on March 31.

Answer 1

1)	Cash A/c Dr	$20,000.00
	To Common stock		$20,000.00
2)	Office Equiptment A/c Dr	$1,500.00
	To Cash		$1,500.00
3)	Production Consumables A/c Dr	$1,200.00
	To Cash		$1,200.00
4)	Raw Material Purchased A/c Dr	$3,000.00
	To Creditors of Raw material		$3,000.00
4)	Production Machinery A/c Dr	$8,000.00
	To Creditors on Machinery		$8,000.00
5)	Cash A/c Dr	$8,700.00
	Debtors A/c Dr	$3,100.00
	To Sales		$11,800.00
6)	Utilities A/c Dr	$1,200.00
	To Cash		$1,200.00
7)	Wages & Salaries A/c Dr	$2,500.00
	To Cash		$2,500.00
8)	Credtors A/c Dr	$1,000.00
	To Cash		$1,000.00
Cash A/c
	Common stock issued	$20,000.00
	Add: Cash Sales	$8,700.00
	Less: Payments
	Office equiptment	$1,500.00
	Production Comsumables	$1,200.00
	Utilities	$1,200.00
	Wages & Salaries	$2,500.00
	Creditors of Raw Material	$1,000.00
	Balance	$21,300.00
Income Statement
	Revenue from Operations	$11,800.00
	($8700+$3100)
Less: Cost of Good Sold
	Raw Material Purchased	$3,000.00
	Productions Consumables consumed	$1,200.00
	Utilities	$1,200.00
	Wages & Salaries	$2,500.00
	Profit	$3,900.00
Balance Sheet
	Liabilities
	Common stock	$20,000.00
	Retained Earnings	$3,900.00
	creditors
	Credtors on Raw Material	$2,000.00
	Creditors of Machinery	$8,000.00
	Total	$33,900.00
	Equities
	Office Equipment	$1,500.00
	Production Machinery	$8,000.00
	Debtors	$3,100.00
	Cash	$21,300.00
	Total	$33,900.00