Gin and Tom Ltd is a clothing wholesaler, which has been operating for only 1 year. At the beginning of its second year of operations, the company has the following items on its balance sheet:

	$
Fixed Assets	2,000
Cash	2,000
Common Stock	400
Retained Earnings	600
5-year Bank Loan	3,000

During the second year, the company did the following transactions:

• Purchases inventory (clothing) for $700, on credit.
• Sells inventory, which originally cost $600, for $1,400. Half of the customers buy on credit and the other half pays in cash.
• Pays $150 at advertising and $75 at insurance. The advertising is paid in cash; however, the insurance will be paid in cash later.
• Purchases a new storage facility for $600, on credit.
• Pays the warehouse employees $200 in cash.
• Pays interest of 10% on its loan, in cash.
• Pays $400 for accounts payables.
• Receives $400 from its customers.
• The company's accountant calculates that because of the above transactions, the company will have to pay tax of $100 later.
• The board of directors decides to pay a dividend of $50 (the dividend is not paid by the end of the fiscal year).

You are given a worksheet for Gin and Tom Ltd's second fiscal year. Fill in the opening balances (from the end of the first year) and record the transactions during the second year. Calculate closing balances and then, using the formats given, create a closing balance sheet and an income statement.

TRANSACTION WORKSHEET ASSETS SHAREHOLDERS' LIABILITIES EQUITY Fixed Invento Acc Cash Comm Ret Income Bank Acc Tax Dividends Assets Receiv Stock Earning State Loan Payable Payable Payable Opening balances Purchase inventory Sales: credit Cost of sales Insurance Advertising Purchase storage fac. Salaries Interest Pay accounts payable Collect accounts rec. Tax Dividend Transfer retained earnings Closing balancesIncome Statement Sales Cost of Sales Gross Profit Operating Expenses Profit before Interest and Tax Interest Profit Before Tax Tax Profit After Tax O Balance Sheet CURRENT ASSETS Cash Accounts Receivable Inventory Total Current Assets FIXED ASSETS Plant and Machinery Total Long Term Assets TOTAL ASSETS CURRENT LIABILITIES Accounts Payable Dividends Payable Tax Payable Total Current Liabilities LONG TERM LIABILITIES Bank Loan Total Long Term Liabilities TOTAL LIABILITIES SHAREHOLDERS' EQUITY Common Stock Retained Earnings Total Shareholders' Equity