Accounting Exercise – Accounting Reports & Ledger Recording

Mrs. Schroeder has started a business that trades in bathroom renovation materials (e.g. tiles, basin, faucets, etc.) in 2014. She wants your help with the accounting aspect of her business:

Jan 15: Started the business with an office apartment ($150000) and cash ($150000).

Feb 18: Bought goods with cash, $15000.

Mar 26: Paid utility expense, 1500, and salary expense, $7500.

Mar 30: Purchased a warehouse to store the goods, $30000.

Apr 12: Borrowed some money, $50000, from the Singapore Bank.

May 17: Sold some goods on cash, $26000. Cost of goods sold is $12000. Also bought goods on credit, $12000.

May 22: Sold goods on credit, $11000. The COGS is $6700.

May 31: Withdraw $5000 of cash for personal use.

Jun 2: Paid interest expense of $2000 to the Singapore Bank.

Jul 14: Returned faulty goods to creditor, $2000.

Jul 16: Paid $8000 to creditor. Bought goods with cash, $7000

Aug 9: Debtor returned faulty goods. The debtor balance is reduced by $4000. The COGS reversed is $1900.

Sept 6: Paid whatever debt still owing to creditor and received discount of $200.

Sept 20: Received $5000 from debtor and gave her a $100 discount.

Nov 19: Sold more goods on cash, $13000. The COGS is $7200.

Requirement: a) Record the transactions above in the ledger accountsb) Balance the asset, liabilities and O/E accounts; and close the revenue and expense accounts to the P&L account.

c) Prepare a P&L statement and a Balance Sheet for the business