Question

B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the bank as capital. The following transactions took place during the first month of operations:

February 3: Purchased supplies for $22,500 in cash.

February 9: Purchased equipment for $255,000, paid $105,000 in cash and the remaining amount will be paid after 10 days.

February 12: Received a bill from Dubai News for advertising amounted to $1,650.

February 14: Paid $24,000 salaries in cash.

February 16: Paid $6,000 utilities expense in cash.

February 17: Provided services to customers for $195,000 in cash.

February 19: Paid $150,000 for equipment purchased on February 9.

February 28: The owner withdrew $7,500 cash for personal use.

Required:

1. Prepare the trial balance of Snow Company on February 29, 2020.
2. Prepare the financial statements of Snow Company on February 29, 2020.

Answer 1

Journal Entries :
S. No.	Date	General Journal	Debit ($)	Credit ($)
1	Feb-01	Cash	3,000,000
		Owner's Capital		3,000,000
2	Feb-03	Purchases	22,500
		Cash		22,500
3	Feb-09	Equipment	255,000
		Cash		105,000
		Accounts Payable		150,000
4	Feb-12	Advertising Expense	1,650
		Accounts Payable		1,650
5	Feb-14	Salaries	24,000
		Cash		24,000
6	Feb-16	Utilities expense	6,000
		Cash		6,000
7	Feb-17	Cash	195,000
		Sales		195,000
8	Feb-19	Accounts Payable	150,000
		Cash		150,000
9	Feb-28	Drawings	7,500
		Cash		7,500
Trial Balance
Particulars	Debit	Credit
Cash	2,880,000
Owner's Capital		3,000,000
Sales		195,000
Accounts Payable		1,650
Drawings	7,500
Utilities Expense	6,000
Purchases	22,500
Equipment	255,000
Salaries	24,000
Advertisement Expenses	1,650
Total	3,196,650	3,196,650
Note : No depreciation has been taken for equipment since information regarding useful life is missing.
Financial Statements of Snow Company :
Balance Sheet of Snow Company as on 29th February, 2020
Particulars	Amount	Particulars	Amount
Owner's Capital	3,000,000	Equipment	255,000
Net Profit during the year	133,350	Cash	2,880,000
Accounts Payable	1,650
Total	3,135,000	Total	3,135,000
Income Statement of Snow Company for year ended 29th February, 2020
Particulars	Amount
Sales	195,000
Less : Expenses
Purchases	22,500
Salaries	24,000
Utilities Expenses	6,000
Advertisement Expenses	1,650
Operating Income	140,850
Less : Drawings	7,500
Net Income	133,350