Flashy Fashions Ltd is a small company in a coastal town. It rents its premises and its sales are all on credit. It has only three expenses: cost of goods sold, rent and income tax. At the end of its previous financial year, 30 September 2015, Flashy's balance sheet was as follows:

During the year ended 30 September 2016, the following information was recorded in the company's accounts.

a. Revenue from credit sales $10 000. 

b. Collections from customers $9600. 

c. Purchases on credit of inventory for sale $6100. 

d. Payments to suppliers $6300. e Cost of goods sold $6400. 

f. Rent charged by the landlord $2400. 

g. Rent paid to the landlord $2900 (decreasing the liability), 

h. Income tax payable for the year $350. 

i. Cash dividends declared and paid to shareholders $450.

Required:
1. Prepare transaction analysis for each of the above items.
2. Prepare an income statement and a balance sheet.

Transcribed Image Text:

FLASHY FASHIONS LTD BALANCE SHEET AS AT 30 SEPTEMBER 2016 $ Assets Current assets Cash Accounts receivable Inventory Equities Current liabilities 800 Accounts payable 400 Rent payable 900 2100 Shareholders' equity Share capital Retained profits $ 600 300 500 700 2100