A new company called Bloomner construct, buys and sells furniture. During January the following happens: 1. The owner of the company pays in $50 000 into the cash, as starting capital. 2. The bank grants the company a bank loan of $40 000, the interest is 15 % annually and the loan will run for 4 years. Loan repayments are made quarterly and the interest for January is paid the 31st of January. 3. During January the company buys furniture and material on credit for $90 000. 4. Sales on credit during January is $350 000. Invoices are sent out to customers. 5. The rent, $10 000, for January is paid in cash. 6. The company receives an invoice for machinery purchase on the amount of $60 000. 7. The company receives an invoice for offices supplies on the amount of $9 000, all the office supplies is used and gone during January. 8. During January the customers pays some of their debts to the company, in total $240 000. 9. The company receives an invoice for telephone used during January, $2 000, the invoice is paid 10th of February. 10. The company pays salary to their employees on the 25th of January, total $85 000 in cash. 11. During January the company pays different suppliers, total $55 000. 12. Depreciation for the month is $1 000. 13. By the end of the month is the value of the remaining stock of products $10 000. Open a balance sheet and an income statement for January. Show each of the transactions on the two statements as a series of pluses and minuses (show your calculations) and transfer the profit or loss to the balance sheet. Prepare a cash flow statement for the month. No tax
If you are trying to "cut and paste" it rarely, if ever, works here. Please type everything out.
Sra
To open a balance sheet and an income statement for January and prepare a cash flow statement, we need to summarize the transactions and calculate the relevant balances. Let's go through each transaction step by step:
1. The owner pays in $50,000 into the cash as starting capital.
- Cash: +$50,000 (increases)
2. The bank grants a loan of $40,000 with a 15% annual interest for 4 years. Loan repayments are made quarterly, and the interest for January is paid on the 31st.
- Cash: +$40,000 (increases)
- Long-term Debt: +$40,000 (increases)
3. The company buys furniture and materials on credit for $90,000.
- Accounts Payable: +$90,000 (increases)
4. Sales on credit during January amount to $350,000. Invoices are sent out to customers.
- Accounts Receivable: +$350,000 (increases)
5. The rent of $10,000 for January is paid in cash.
- Cash: -$10,000 (decreases)
6. The company receives an invoice for machinery purchase amounting to $60,000.
- Machinery: +$60,000 (increases)
- Accounts Payable: +$60,000 (increases)
7. The company receives an invoice for office supplies amounting to $9,000, and all the office supplies are used during January.
- Office Supplies Expense: +$9,000 (increases)
- Accounts Payable: +$9,000 (increases)
8. Customers pay some of their debts to the company, totaling $240,000.
- Cash: +$240,000 (increases)
- Accounts Receivable: -$240,000 (decreases)
9. The company receives an invoice for telephone usage during January, amounting to $2,000. The invoice is paid on February 10th.
- Telephone Expense: +$2,000 (increases)
- Accounts Payable: +$2,000 (increases)
10. The company pays employee salaries totaling $85,000 in cash on January 25th.
- Salaries Expense: +$85,000 (increases)
- Cash: -$85,000 (decreases)
11. The company pays different suppliers a total of $55,000.
- Accounts Payable: -$55,000 (decreases)
- Cash: -$55,000 (decreases)
12. Depreciation for the month amounts to $1,000.
- Depreciation Expense: +$1,000 (increases)
- Accumulated Depreciation: +$1,000 (increases)
13. The remaining stock of products at the end of the month is valued at $10,000.
- Inventory: $10,000 (balance carried forward to the balance sheet)
Now, we can proceed to create the balance sheet, income statement, and cash flow statement.
Balance Sheet as of [End of January]:
----------------------------------------
Assets:
- Cash: $[Starting balance + all cash inflows - all cash outflows]
- Accounts Receivable: $[Sum of all credits - Sum of all debits]
- Inventory: $10,000 (from transaction 13)
- Machinery: $60,000 (from transaction 6)
Total Assets: $[Sum of all assets]
Liabilities:
- Long-term Debt: $40,000 (from transaction 2)
- Accounts Payable: $[Sum of all credits - Sum of all debits]
Total Liabilities: $[Sum of all liabilities]
Owner's Equity:
- Starting Capital: $50,000 (from transaction 1)
- Retained Earnings: $[Profit/Loss from income statement]
Total Owner's Equity: $[Sum of all equity]
Total Liabilities and Owner's Equity: $[Sum of all liabilities and equity]
Income Statement for January:
-----------------------------
- Revenues (Sales on credit): $350,000 (from transaction 4)
- Less: Cost of Goods Sold (Beginning Inventory + Purchases - Ending Inventory)
- Gross Profit: $[Revenue - Cost of Goods Sold]
- Operating Expenses:
- Rent Expense: $10,000 (from transaction 5)
- Office Supplies Expense: $9,000 (from transaction 7)
- Salaries Expense: $85,000 (from transaction 10)
- Telephone Expense: $2,000 (from transaction 9)
- Depreciation Expense: $1,000 (from transaction 12)
- Total Operating Expenses: $[Sum of all operating expenses]
- Net Income (Loss): $[Gross Profit - Total Operating Expenses]
Cash Flow Statement for January:
-------------------------------
- Cash flows from operating activities:
- Cash inflows from customers: $240,000 (from transaction 8)
- Cash outflows for salaries: $85,000 (from transaction 10)
- Cash outflows for suppliers: $55,000 (from transaction 11)
- Net Cash from Operating Activities: $[Sum of cash inflows - Sum of cash outflows]
- Cash flows from investing activities:
- Cash outflows for machinery purchase: $60,000 (from transaction 6)
- Cash flows from financing activities:
- Cash inflows from bank loan: $40,000 (from transaction 2)
- Net Increase in Cash: $[Net cash from operating activities + Net cash from investing activities + Net cash from financing activities]
Please note that the values provided for assets, liabilities, and equity are based on the information given. You would need to populate the specific values based on the calculations and provided numbers.