Exercise 2: You will find below a series of transactions pertaining to the first 3 months of business for PILL WORLD - a local pharmacy. Analyze each transaction in a tabular format, and then prepare the financial statements of the pharmacy (Income Statement, Retained Earnings Statement, Balance Sheet, and Cash Flow Statement) for the first quarter ending on March 31, 2022. January 1-Owner invested $75,000 of savings to share capital and took a $200,000 bank loan over 10 years with a 2.5% annual rate to start the pharmacy. January 2 Purchased a Logo for $1,000, and indoor/outdoor painting services from N&N Painting for $5,000 paid immediately in cash. January 5 - Hired 6 pharmacists to start working full-time on January 19th. The settled salary will be $1,400 per month per pharmacist. January 6 - Purchased 2 credit card machines for $800/unit and a low-temperature fridge for $11,100 from Walmart. January 14 - Purchased 10 batches of drugs from PCI Pharma Services for $1,000/unit with a 3% commercial discount under the terms 2/10, n/30. January 19 - Sold a batch of drugs for $2,000 (with inventory cost of $970) to a customer who paid immediately in cash. January 25 Settled accounts with PCI Pharma Services for the batch of drugs in cash. February 1 - Sold 2 batches of drugs for $5,000 (with inventory cost of $1,940) to a customer who paid in cash. February 7 Signed a contract with a nearby hospital for priority over drug batches and sold 5 batches immediately for $15,000 (with inventory cost of $4,850) with a 2% commercial discount and freight cost of $95 (FOB Destination) paid immediately by the concerned party. February 14 - Purchased 10 batches of drugs from PCI Pharma Services for $1,100/unit under the terms 2/10, n/30. February 19- Paid salary to employees immediately in cash. February 24 - Sold 2 batches of drugs to customers for $5,000 with an inventory cost of $1,940. March 3 - Settles account with PCI Pharma Services related to the transaction on February 14th. March 8 - Sold 6 batches to nearby hospital, on account, for $18,000 (with inventory costs of $6,600) under the terms 2/10, n/30 and freight cost of $100 (FOB Destination) paid immediately by the concerned party. March 13 Received payment from nearby hospital related to the transaction made on March 8th. March 14 - Purchased in cash 10 batches of drugs from PCI Pharma Services for $1,050/unit March 19 - Paid employee salary immediately in cash. Also declared and paid full dividends to owners $6,500. March 24 - Sold 9 batches of drugs for $22,500 (with inventory cost of $9,650) to a customer who paid immediately in cash. March 30 Reimbursed $5,000 of bank loan, and also paid the interest expense related to the first quarter. March 31 Recorded the depreciation expense (as per Straight-line method) related to the low-temperature fridge purchased on January 6th. This equipment cost $11,100 with a useful life of 10 years and a residual value of $2,100
