Smart Traders have recently started their business and need help in analysing their financial transactions. Given below is a summarised Balance Sheet for their business at the start of May 2019,followed by the transactions that occurred during the month of May 2019. Balance Sheet as at 1st Iay 2019 $ Liabilities Assets Cash Debtors Inventory Motor vehicles Machinery 100, 000 Accounts payable 50, 000 Mortgage Loan 37, 500 Owners Equity 100,000 Capital 175,000 Retained Eamings. + Transactions for the month of May are: o Purchased inventory for $23,250 and paid cash. o Collected $24,250 from debtors. (ii) (iii) (iv) o Sold inventory that cost $26,000 for cash $50,000 o paid accounts payable $27,500. o Paid operating expenses $12,500 o Owner's additional cash contributions to the business $ 15,700. o Purchased an additional motor vehicle for $ 40,000, paying half in cash and agreeing to pay the balance next month. o Owner withdrew $2,500 inventory from the business for private use. Required: 77, 500 150,000+ 225,000 10,000 Prepare a worksheet using the accounting equation. Prepare an Income Statement Prepare a Statement of Owners Equity Prepare a Statement of Cash flows Prepare a statement of Financial Position
Smart Traders have recently started their business and need help in analysing their financial transactions. Given below is a summarised Balance Sheet for their business at the start of May 2019,followed by the transactions that occurred during the month of May 2019. Balance Sheet as at 1st Iay 2019 $ Liabilities Assets Cash Debtors Inventory Motor vehicles Machinery 100, 000 Accounts payable 50, 000 Mortgage Loan 37, 500 Owners Equity 100,000 Capital 175,000 Retained Eamings. + Transactions for the month of May are: o Purchased inventory for $23,250 and paid cash. o Collected $24,250 from debtors. (ii) (iii) (iv) o Sold inventory that cost $26,000 for cash $50,000 o paid accounts payable $27,500. o Paid operating expenses $12,500 o Owner's additional cash contributions to the business $ 15,700. o Purchased an additional motor vehicle for $ 40,000, paying half in cash and agreeing to pay the balance next month. o Owner withdrew $2,500 inventory from the business for private use. Required: 77, 500 150,000+ 225,000 10,000 Prepare a worksheet using the accounting equation. Prepare an Income Statement Prepare a Statement of Owners Equity Prepare a Statement of Cash flows Prepare a statement of Financial Position
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Smart Traders have recently started their business and need help in analysing their financial
transactions. Given below is a summarised Balance Sheet for their business at the start of
May 2019, followed by the transactions that occurred during the month of May 2019.
Assets
Cash
Debtors
Inventory
Balance Sheet as at 1st Iay 2019
$
Liabilities
Motor vehicles
Machinery
100, 000 Accounts payable
50, 000 Mortgage Loan.
37, 500 Owners Equity
100,000 Capital
175,000 Retained Eamings
(iii)
(iv)
(v)
+
77, 500
150,000 +
225, 000
10, 000
Transactions for the month of May are:
o Purchased inventory for $23,250 and paid cash.
o Collected $24,250 from debtors.
o Sold inventory that cost $26,000 for cash $50,000
o Paid accounts payable $27,500.
o Paid operating expenses $12,500
o Owner's additional cash contributions to the business $ 15,700.
o Purchased an additional motor vehicle for $40,000, paying half in cash and
agreeing to pay the balance next month.
o Owner withdrew $2,500 inventory from the business for private use.
Required:
(1)
Prepare a worksheet using the accounting equation.
Prepare an Income Statement
Prepare a Statement of Owners Equity
Prepare a Statement of Cash flows
Prepare a statement of Financial Position
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