Charlene Jacksons business, Hair Today, has been operating in Auckland for the month of February 2020. It is set up as a sole trader. You call in for a haircut, and while she is trimming your hair, she tells you how business is going. I think its going very well, she says. Last time I went to the bank there were a lot of deposits. There were cash deposits of $100, $110, $105 and so on, totalling exactly $10,500 for February, the first months business. These dont include the $500 still owed me for haircuts provided to the builders working on the new Recreation Centre at the University and the $1,000 prepaid by staff at the nearby office block. Of course the bank account also includes the $25,000 of savings that I put into the business when I started it up and the $10,000 loan that the bank gave me. Not to mention the balance of $20,000 in my personal savings account that I can always use, if necessary. I have spent $12,000 on the furniture and equipment for the business, $9,500 on hairdressers supplies and then there is the lease of this place. It is a TWO-year lease, but I paid six months rent in advance (from February to July), thats $5,400 and a lease deposit of $2,000 that I can get back. The furniture and equipment should last 5 years with no residual value. Straight-line depreciation method is used. And the supplies, well I still have $4,000 worth unopened and sitting in the storeroom. I also get a cleaning company to come and do the floors; they charge $25 a week. I havent had to pay them anything yet, and I still owe them for four weeks work. Oh, theres Marama. I just hired her yesterday at a salary of $2,000 per month. Todays her first day of work. I also drew out $300 in cash to take my sister out to dinner on her birthday

Required: (a) Prepare a worksheet using the template showing how the above accounting events will affect the Balance Sheet Equation. Note: calculate one months depreciation on the furniture and equipment. Ignore tax. (b) Prepare an Income Statement for the month of February 2020 and a Balance Sheet as at 29 February 2020 using the template.

a) Transaction worksheet ASSETS = LIABILITIES + EQUITY Item Cash Receivables Supplies Furniture & Equipment Prepayment Lease Deposit Accounts Payable Revenue received in advance Bank Loan Capital Revenue Expenses Description - 7 9 11 12 13 | Totals Notes: (b) Income Statement and Balance Sheet You may change the format of the lines in the table Hair Today Income Statement For the month of February 2020 Hair Today Balance Sheet As at 29 February 2020