Question
You should assume that todays date is 1 April 2021 You are a senior accountant of ABC firm, and you have just had a meeting
You should assume that todays date is 1 April 2021
You are a senior accountant of ABC firm, and you have just had a meeting with Alex who is one of your clients.
1 March 2021, Alex commenced self-employment as a sole trader. During the first month of operations, March 2021, the following transactions took place.
1 March | Started with cash and ordinary shares of 10,000 |
1 March | Raised loan from bank of 10,000. |
1 March | Paid monthly rental of shop for 2,000 in advance. |
1 March | Purchased 5,000 of goods for cash from Amy. |
5 March | Sold 7,000 of goods to Bill for cash. |
11 March | Purchased 10,000 of goods for cash from Candy. |
15 March | Sold 14,000 of goods to Dee on credit. |
20 March | Received 13,720 cash on account from Dee. |
22 March | Purchased 15,000 of goods for cash from Eric. |
25 March | Received sales return of 400 |
31 March | Sold 20,000 of goods to Frank on credit with 5% sales discount |
31 March | Paid monthly freight expense of 1,500 by cheque. |
31 March | Paid a telephone bill of 110 by cheque. |
31 March | Paid wages of part-time employee of 1,500 by cheque |
31 March | Paid monthly interest of 100. |
31 March | Alex paid himself 2,000 in 'wages'. |
Alex is going to expand his business in the future. He realizes that he is going to need more money in business.
Required
Write 300 words
Draft a report to answer Alex for the following questions:
- Post to the ledger and show the balance in each account after all transitions have been posted.
- Prepare the Income Statement for the month ended 31 March 2021, and the Balance Sheet at 31 March 2021
- How to solve the cash problems in his business?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started