Jennie, a trader has opening account balances and transactions for the month of August 2020 as follow:
August 1: Cash at bank: £5,000, Cash on hand: £2,500, Office equipment : £10,000, Account
Receivable: £1,000, Inventory £1,200, Loan: £4,000, Account Payable: £4000.
2 Put £1050 into the business bank account.
3 Loan £3,300 from Northen Bank, repayable in two years' time.
6 Buys office equipment for the business, paying £2,500 by bank transfer.
8 Buys goods for resale, paying by cheque £1060.
12 Sells goods for £1,230; customer pays by cheque.
16 Buys goods for resale on time £1,190.
18 Sells goods on time £2,070
26 Takes £580 from business bank account to pay for personal living expenses.
31 Pays staff wages for August, £710 by cheque.
31 Pays electricity bill for the month, £320 by bank transfer
Required:
a) Prepare Balance Sheet as at 1 August. (5 points)
b) Recording all the transactions. (10 points)
c) Prepare trial balance as at 31 August 2020 (15 points)
d) Assuming that the closing inventory has been counted and valued at cost total of £1,170, prepare
an Income Statement for the month (Showing all double entries necessary). ( 15 points)
e) Prepare Balance Sheet as at 31 August. (5 points)