Your friend Jane Thomson is about to prepare the 31 January balance sheet for her new business, Tasty Bites cupcake shop. This is Tasty Bites' first month of operation, and Jane is also going to calculate the first month's net income. She needs to prepare the balance sheet and calculate net income so she can pass the information along to her parents. They loaned her \(\$ 5000\) so that she could start Tasty Bites.

Although Jane thinks that business is booming, she has a big problem. She does not know enough about accounting to prepare the balance sheet or calculate January's net income. As a matter of fact, Jane had never heard the words 'balance sheet' and 'net income' until her parents asked her to promise to give them these statements every month before they would agree to loan Jane the \(\$ 5000\).

Luckily Jane saves every piece of paper associated with Tasty Bites. She kept copies of all of the business agreements she signed. She deposited all of the money Tasty Bites earned in the company's bank account and retained copies of every deposit slip. Jane also paid every company bill with a cheque and saved all of the related documents.

Required:

Assume Jane wants to prepare Tasty Bites' 31 January balance sheet and January's income statement according to generally accepted accounting principles. Describe to Jane, in your own words, how she should organise the information about Tasty Bites' January transactions so that she can prepare a balance sheet and an income statement and keep her promise to her parents.