1 3 4 Samantha is the financial controller of a newly founded retail business called Winnipeg Ltd. The company began its operations in January and had been off to a good start. However, management is concerned about the stability of the business because they did not know how the company was doing financially in the first two months of operation and would need to update their investors in a few weeks' time. Samantha has gathered a list of transactions (see below) and will need to prepare a list of information to discuss with management. Required a. (35 marks) Prepare journal entries (in good format) for the following transactions: (You will be marked based on accuracy and format of the journal entries.) # Date Transaction Jan 1 Common shares are issued for $500,000 2 Jan 1 Obtained a bank loan for $200,000 Jan 1 Paid $3,600 cash for the rent of January & February Jan 1 Paid $35,000 to purchase equipment for manufacturing 5 Jan 1 Purchased an insurance policy for 24 months for $2,400 cash 6 Jan 5 Purchased inventory for $60,000 on account 7 Jan 6 Purchased land for $100,000, 510,000 was paid in cash, and the balance was from a mortgage 8 Jan 10 Sold $30,000 of product to customer, of which S20,000 was paid by cash and the customer would pay the remaining balance later 9 Jan 10 The cost of products of the above sale was $12,000 10 Jan 18 The customer made a payment on the balance in transaction 8 11 Jan 25 Paid the balance owing to supplier in transaction 6 Jan 31 Received utility bills totalled $4,500 Jan 31 Paid advertising costs for January in the amount of $1,500 14 Jan 31 Employees worked for the month of January and total wages was $8,500 15 Jan 31 Paid wages to employees in transaction 14 16 Jan 31 Declared dividends of $1,000 to shareholders to be paid later 17 Jan 31 Record insurance expense for the month of January 18 Jan 31 Interest expense on the bank loan in transaction 2 is 6% per annum and interest payments are to be made on a quarterly basis 19 Jan 31 Record depreciation expense in January. The company is using straight line depreciation method and the equipment has a useful life of 5 years, with an estimated residual value of $5,000. 20 Feb 5 Paid utility bill in transaction 12 21 Feb 6 Sold $9,000 goods to customer for cash. 22 Feb 6 Cost of product for transaction 19 was $3,500 PIC.COLLAGE 12 13 23 Feb 15 24 Feb 18 25 Feb 20 26 Feb 25 27 Feb 28 28 Feb 28 29 Feb 28 Hired a website developer to create company's webpage. The quote price was $4,500 and the work will officially start in March Purchased $5,000 inventory in cash Put down a deposit of $5,000 for booking a conference facility to be used in April Paid dividends that were previously declared to shareholders Paid employees' wages of $5,400 in February and S600 remained unpaid. Receive a bill of landscape work that was done a week ago for $500. Perform an inventory count and realized $500 worth of inventory was in bad condition and cannot be sold. (Hint: inventory shrinkage can be recorded as cost of goods sold) Record rent expense, depreciation expense, insurance expense and interest expense for the month of February 30 Feb 28 b. (5 marks) What is the ending balance for cash? Show your calculations by preparing a T-account (You will be marked based on overall format and presentation of the T-account.) c. (20 marks) Based on the information available, prepare the following financial statements: a. Statement of Income (for the two months period) b. Classified Statement of Financial Position (as of February 28) (You will be marked based on overall format and presentation of the statements.) d. (10 marks) Briefly comment on how the company did in the past two months. (100-150 words) (You will be marked based on quality of your response.) PIC.COLLAGE