Question 1: Journalize all the transactions below for a business (Precious Purses Inc.) that sells discount purses and clothing that started up in January 2018.

Question 2: Prepare the following financial statements (at or for the period ending Dec 31, 2028):

• Statment of Financial Position (Balance Sheet)
• Statement of Comprehensive Income (Income Statement)
• Statement of Changes in Equity (Statement of Retained Earnings)
• Statement of Cash Flows (Cash Flow Statement)

Question 3: Close the journal entries for the year. Use Z as your transaction letter.

Transactions:
Date	#	Description
JAN	A	You put $500K into your business, which is a corporation.
JAN	B	Received $500k as a five-year loan from the bank in the form of a notes payable, at a 5% interest rate starting in January. Interest is to be paid at the end of the year. The loan principal is to be paid in equal installments over five years at the end of each year.
JAN	C	Purchased $300K of inventory on account.
FEB	D	Prepaid for warehouse rent at the beginning of the month - $60,000 for twelve months.
FEB	E	Paid down $50K of accounts payable.
FEB	F	Sold purses for $70K with a gross margin of 35%. The customer paid with $30K in cash, the rest on account.
FEB	G	Purchased $10K of supplies with cash.
MAR	H	Received $70K of cash in advance for a clothing monthly delivery service to be provided over the next 12 months.
MAR	I	Purchased equipment for $100K with cash.
APR	J	Sold $120K worth of goods at a gross margin of 50%. All proceeds were in cash.
APR	K	Sold the equipment for $110K, receiving cash.
MAY	L	Purchased inventory for $100K on account.
MAY	M	Sold $100K worth of goods at a gross margin of 75%. 75% of proceeds were on account, the rest in cash.
JUL	N	Purchased $75K of inventory on account.
AUG	O	Paid down $75K of payables.
OCT	P	Collected $70K in accounts receivables.
DEC	Q	Had marketing expenses of $7.5K during the year and sales expenses of $20K. All of these expenses were paid in cash.
DEC	R	Total cash wages paid during the year were $50K.
DEC	S	Delivered on $50K of services that were already paid for (from transaction H) at a gross margin of 50%.
DEC	T	It is now Dec 31, and are preparing financial statements for the year end.
		Perform any remaining accruals/adjusting entries that occurred from Jan to Dec 31, 2018. $1K in wages outstanding remain on Dec 31, 2018 and the ending supplies balance was $4K. $3K of dividends were declared but not paid before the end of December. Remember that transaction S was already adjusted for transaction H.
DEC	U	Your tax rate on earnings is 30%. Taxes remain unpaid at the end of December.