Answered: 1.Because of the loan, you have to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1.Because of the loan, you have to provide the bank with your financial statements at the end of the month - Feb 28, 2021. (we have to make proper FS including adjustments)

2.You do a quick count of your inventory and find there are 19 pairs of shoes in inventory.

3.On March 2nd, you receive a report from Shopify that states your credit card processing fees for the last month totalled $250. Shopify will remove the amount due from your future sales transactions.

4.The March 2nd report also includes notice that your next $400 monthly fee will also simply reduce the amount received from future sales transactions.

5.You think that your office furniture etc. will last for about 3 years.

6.You do a quick check and find there's still about $370 worth of office and packing supplies left.

7.In your wallet you find receipts dating Feb 13 - Feb 28 from Canada Post. They are all for shipping the shoes to customers throughout the month. You must not have had business cheques because the total of the receipts, $1089, was all charged to your personal MasterCard.

Transcribed Image Text:T1 Feb 1 You invest $10,000 into your brand new company, Just for Kicks. T2 Feb 1 You obtain a bank loan of $20,000 at a rate of 8% per year. T3 Feb 2 You purchase 50 pairs of shoes from Sloan's Shoes. Total cost is $2,500 terms 2/10, net 30. T4 Feb 3 Go to Staples to buy a desk, chair, and filing cabinet etc for a total of $1,100. T5 Feb 3 |When at Staples you also purchase $500 worth of packing and office supplies. 10 | You pay $400 for the first month of Shopify's Advanced Features. 11 T6 Feb 4 12 T7 Feb 6 With the website set up, you make your first sales - 10 pairs of shoes at an average price of $120 each. 13 14 T8 Feb 6 You go to the post office and ship the 10 pairs of shoes for a cost of $11 per pair. You pay with a business cheque. 15 16 T9 Feb 8 A friend comes to your place and buys shoes directly from you. He says he'll pay you the $100 next eek. 17 18 T10 Feb 13 In the last week, you sold 38 pairs of shoes at an average price of $120 each. 19 20 21 T11 Feb 14 You're low on inventory and buy another 80 pairs from Sloan's Shoes. You pay with a business cheque. 22 23 T12 Feb 14 While you're there, you pay Sloan's shoes the full amount owing from Feb 2. 24 Feb 14 On the way back from Sloan's Shoes, you buy yourself a $15 lunch using cash from the business. 25 T13 26 27 T14 Feb 20 One of your customers emails to say they want to return the shoes - he was able to buy them elsewhere for less. 28 You decide to allow the return but he must cover the cost of shipping them back to you. You receive the shoes the next day and process the full refund of $120. 29 30 31 T15 Feb 25 |You learn that Shopify's service allows you to sell gift certificates. You do some promotion and within a few hours have sold $500 worth of gift cards. 32 33 In the last few weeks you've sold 60 pairs of shoes for the average price of $120. Gift cards totalling $150 were used. 34 T16 Feb 26 35 T17 With so much cash on hand, you decide to make a $15,000 payment on the principal of your bank loan. 36 Feb 28 37 Please document any AJES you do here. Show the calcs / reasoning and then input them into the next tab. 38 39 40 AJE 1 41

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