Findlay David set up in business as landscape gardener on 1 June 2020. The following represents the business transactions of the first month.

1. Findlay paid 40,000 into the business bank account.

2. He obtained a ten-year business loan of 15,000 from the bank, paying the cash into the business bank account.

3. Findlay purchased equipment and machinery for 50,000, on 2 years interest-free credit.

4. He received orders for garden design work and he bought materials costing 80,000. He paid 60% of this amount in cash and took the other 40% on credit from suppliers, to be paid for in August.

5. During the month Findlay used up materials costing 40,000 in work done for customers.

6. Invoices totalling 70,000 were sent to customers for work done in June. 25% of this amount was received in cash from customers during June. The remainder of the cash was expected to be received in July and August.

7. At the end of June Findlay paid the following expenses from his business bank account

(a) Wages to assistants 10,000

(b) Interest on bank loan 150

8. Findlay has used gas and electricity during June and estimates that he will receive a bill for 600.

9. He decided to depreciate the equipment and machinery at a rate of 800 per month.

10. At the end of June Findlay took 3,000 in drawings for personal spending needs.

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Required

1. Enter these transactions in the Accounting Equation

(15 marks)

2. Prepare the income statement and a statement of cash flows for the month of October and the statement of financial position (balance sheet) at 31 October 2018.