(a) R ecord the following transactions in a set of double-entry accounts:

1 February Lee (the owner) put £6,000 into a newly-opened business bank account to start a new business 3 February Bought inventories for £2,600 for cash 5 February Bought some equipment (non-current asset) for cash for £800 6 February Bought inventories costing £3,000 on credit 9 February Paid rent for the month of £250 10 February Paid fuel and electricity for the month of £240 11 February Paid general expenses of £200 15 February Sold inventories for £4,000 in cash; the inventories had cost £2,400 19 February Sold inventories for £3,800 on credit; the inventories had cost 2,300 21 February Lee withdrew £1,000 in cash for personal use 25 February Paid £2,000 to trade payables 28 February Received £2,500 from trade receivables

(b) Balance the relevant accounts and prepare a trial balance (making sure that it agrees).

(c) Prepare an income statement for the month and a statement of financial position at the month end. Assume that there are no prepaid or accrued expenses at the end of the month and ignore any possible depreciation.

Exercises APPENDIX A Rec ordi 710 ng fi nancia l transacti ons AppendixLO1