(a) Using “T-accounts”, record debit and credit entries for each of the following transactions that all occurred in January 20X1 for a San Francisco restaurant. The T-accounts you will need are: Cash, Food Inventory, Beverage Inventory, Accounts Receivable, Furniture and Equipment, Accounts Payable, Bank Loan, Owners’ Equity, Revenue, Food Purchase Expense, Beverage Purchase Expense, Wage Expense, Supplies Expense, Rent Expense, Interest Expense.

(b) Once the T-account entries have been recorded, prepare an income statement for January 20X1 and a balance sheet as at 31st January 20X1.

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a. b. C. Mr T. Francis commenced business by investing $30,000 cash in the restaurant. Purchased on credit food stock for $4,000 and beverage stock for $6,000. Purchased furniture and equipment for $20,000, paying $12,000 cash and owing the balance. d. The bank extended a loan of $20,000 to the business. e. f. g. Made sales of $40,000 during the month - 75 per cent of this was cash sales, the remainder was on credit. Purchased $9,000 of perishable food items (food purchase expense) on credit and paid $2,000 cash for beverages (beverage purchase expense). The business has established that both these purchases should be immediately expensed. Paid $12,000 to trade creditors. h. Repaid $2,000 of the bank loan plus interest of $100. i. j. k. Paid $10,800 of wages. Paid $4,000 for miscellaneous supply items. The business has a policy of expensing these items on purchase. On the last day of the month, paid $1,500 rent for January.