Susan's Shoe Shop opened on January 1. The following transactions took place during the first month: 1. Deposited $30,000 in the firm's checking account. 2. Purchased shoes, boots, socks, and other inventory for $45,000 on account. 3. Purchased display shelving, chairs, and other fixtures for $10,000 cash and $40,000 on account. Assume a useful life of five years. 4. Obtained $20,000 and signed a three-year, $20,000 bank loan at 8% annual in- terest. 5. Had sales revenue during January of $75,000. Of this amount, $25,000 was received in cash and the balance was on account. 6. The cost of the merchandise sold in item 5 was $32,000. 7. Paid $10,000 to each of two different creditors. 8. Signed an application for a one-year insurance policy and paid the year's pre- mium of $2,400. 9. Paid three employees a monthly salary of $2,000 each. 10.Collected $35,000 from (accounts receivable) customers. Required O Analyze these transactions, including any appropriate adjustments, using the basic accounting equation. OPrepare a simple income statement for the firm. Prepare a simple balance sheet for Susan's Shoe Shop.
Susan's Shoe Shop opened on January 1. The following transactions took place during the first month: 1. Deposited $30,000 in the firm's checking account. 2. Purchased shoes, boots, socks, and other inventory for $45,000 on account. 3. Purchased display shelving, chairs, and other fixtures for $10,000 cash and $40,000 on account. Assume a useful life of five years. 4. Obtained $20,000 and signed a three-year, $20,000 bank loan at 8% annual in- terest. 5. Had sales revenue during January of $75,000. Of this amount, $25,000 was received in cash and the balance was on account. 6. The cost of the merchandise sold in item 5 was $32,000. 7. Paid $10,000 to each of two different creditors. 8. Signed an application for a one-year insurance policy and paid the year's pre- mium of $2,400. 9. Paid three employees a monthly salary of $2,000 each. 10.Collected $35,000 from (accounts receivable) customers. Required O Analyze these transactions, including any appropriate adjustments, using the basic accounting equation. OPrepare a simple income statement for the firm. Prepare a simple balance sheet for Susan's Shoe Shop.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question: Solve the question shown in the image and upload the answer in the attachment. a) Transaction analysis b) Income statement c)
Transcribed Image Text:Susan's Shoe Shop opened on January 1. The following transactions took place
during the first month:
1. Deposited $30,000 in the firm's checking account.
2. Purchased shoes, boots, socks, and other inventory for $45,000 on account.
3. Purchased display shelving, chairs, and other fixtures for $10,000 cash and
$40,000 on account. Assume a useful life of five years.
4. Obtained $20,000 and signed a three-year, $20,000 bank loan at 8% annual in-
terest.
5. Had sales revenue during January of $75,000. Of this amount, $25,000 was
received in cash and the balance was on account.
6. The cost of the merchandise sold in item 5 was $32,000.
7. Paid $10,000 to each of two different creditors.
8. Signed an application for a one-year insurance policy and paid the year's pre-
mium of $2,400.
9. Paid three employees a monthly salary of $2,000 each.
10.Collected $35,000 from (accounts receivable) customers.
Required
O Analyze these transactions, including any appropriate adjustments, using the
basic accounting equation.
OPrepare a simple income statement for the firm.
Prepare a simple balance sheet for Susan's Shoe Shop.
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