Question: In September 2017 Denis Sonin had a great idea to

In September 2017, Denis Sonin had a great idea to make some money. He de cided he would sell holiday items in the local mall in the two months before Christmas. He set up a proprietorship he called Denis’s Great Gifts, opened a bank account in the proprietorship’s name, and deposited $10,000 of his savings into the account. He borrowed $7,000 from his grandmother, which he also deposited into the bank account, promising her that he would repay the money by the end of January. On October 15, he came to terms with the mall manager to rent a small store in a good location for two months ending December 31. He paid the rent of $2,000 for the two months in full on October 15. Next, Denis purchased tables, shelving, and the other materials he needed to operate his store for $3,000. He spent as little money as possible on these items because he wanted to provide the merchandise to customers at low prices and that meant keeping the store simple. In the last week of October, Denis purchased merchandise to stock the store. He bought books, Christmas decorations, and other low-cost items he thought would be popular. In total, Denis purchased merchandise costing $22,000. He paid the various suppliers $10,000 in cash and agreed to pay the rest in 30 days. He also purchased an advertisement in the community newspaper for $500 that would run in the first week of November. He paid for the advertisement on October 29.

a. Use an accounting equation spreadsheet to record the economic activity of Denis’s Great Gifts.
b. Use the information from your spreadsheet to prepare a balance sheet for Denis as of October 31.

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  • CreatedFebruary 26, 2015
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