The Glavits Company opened for business on Monday, June 1, with inventory of $5,000 and cash in the bank of $7,000. These were its only assets. All start-up financing was provided from the owners personal funds, and there were no other liabilities. The firm has a line of credit at the bank that enables it to borrow up to $20,000 by writing overdraft checks on its account.

Glavitss terms of sale are net 30, but the new firm must pay its suppliers in 10 days. Employees are the companys only expense. Theyre paid a total of $1,000 per week each Friday afternoon for the week just ending.

On June 3, the company made a sale of $9,000 out of inventory with a cost of $3,000. On June 10, it received $2,000 of new inventory. There were no other sales or inventory receipts. The company bought a delivery truck, paying with a $6,000 check on June 30. The books were closed for the month on Tuesday, June 30.

Construct Glavitss income statement and balance sheet for June using the worksheet shown. Ignore taxes for this problem. First, enter the beginning balance sheet. Next, enter one number two times in each column to reflect the transaction indicated at the top of the column. Note that sometimes the numbers will be additions and sometimes they will be subtractions. Finally, add across the page to get the statements for June.

Worksheet Rows 1. BALANCE SHEET 2. Assets 3. Cash 4. Accounts receivable 5. Inventory 6. Fixed assets (net) 7. Total assets 8. (skip) 9. Liabilities 10. Accounts payable 11. Accruals 12. Debt 13. Equity 14. Total liabilities & equity 15. (skip) 16. INCOME STATEMENT 17. Sales 18. Cost 19. Expense 20. Net income

Worksheet Columns : 1. Opening balance sheet 2. Record sales 3. Record cost of sale 4. Receive inventory 5. Pay for inventory 6. Buy truck 7. Pay employeesfirst 4 weeks 8. Pay employeeslast 2 days 9. Reclassify cash overdraft as loan 10. Record net income as income 11. (skip) 12. June statements