Bluberry Ltd is a clothing wholesaler, which has been operating for only one year. At the...

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Bluberry Ltd is a clothing wholesaler, which has been operating for only one year. At the beginning of its second year of operations, it has the following items on its balance sheet: S Fixed Assets Cash Common Stock Retained Earnings 5 year Bank Loan 2,000 2,000 7. Pays $400 for accounts payables. 8. Receives $400 from its customers. 400 600 3,000 During the second year, the company undertakes the following transactions: 1. Purchases inventory (clothing) for $700, on credit. 2. Sells inventory, which originally cost $600, for $1,400. Half of the customers buy on credit and the other half pays in cash. 3. Pays $150 for advertising and $75 for insurance. The advertising is paid in cash, but the insurance will be paid in cash later. 4. Purchases a new storage facility for $600, on credit. 5. Pays the warehouse employees $200 in cash. 6. Pays interest of 5% on its loan, in cash. 9. The company's accountant calculates that as a result of the above transactions, the company will have to pay tax of $100 at a later date. 10. Finally, the board of directors decides to pay a dividend of $50 (the dividend is not paid by the end of the fiscal year). On the following page, you are given a worksheet for Bluberty's second fiscal year. Fill in the opening balances (from the end of the first year) and record the transactions during the second year. Calculate closing balances and then, using the formats given, construct a closing balance sheet and an income statement. + Opening balances Purchase inventory Sales Cost of sales Insurance Advertising Purchase storage fac. Salaries Interest Pay accounts payable Collect accounts rec. Tax Dividend Transfer retained earnings Closing balances Fixed Assets ASSETS TRANSACTION WORKSHEET Invento Acc ry Receiv SHAREHOLDERS' EQUITY Cash Comm Ret Income Stock Earning State LIABILITIES Tax Dividends Bank Acc Loan Payable Payable Payable Income Statement Balance Sheet Sales Cost of Sales Gross Profit Operating Expenses Profit before Interest and Tax Interest Profit Before Tax Tax Profit After Tax CURRENT ASSETS Cash Accounts Receivable Inventory Total Current Assets FIXED ASSETS Plant and Machinery Total Long Term Assets TOTAL ASSETS CURRENT LIABILITIES Accounts Payable Dividends Payable Tax Payable Total Current Liabilities LONG TERM LIABILITIES Bank Loan Total Long Term Liabilities TOTAL LIABILITIES SHAREHOLDERS' EQUITY Common Stock Retained Earnings Total Shareholders' Equity Bluberry Ltd is a clothing wholesaler, which has been operating for only one year. At the beginning of its second year of operations, it has the following items on its balance sheet: S Fixed Assets Cash Common Stock Retained Earnings 5 year Bank Loan 2,000 2,000 7. Pays $400 for accounts payables. 8. Receives $400 from its customers. 400 600 3,000 During the second year, the company undertakes the following transactions: 1. Purchases inventory (clothing) for $700, on credit. 2. Sells inventory, which originally cost $600, for $1,400. Half of the customers buy on credit and the other half pays in cash. 3. Pays $150 for advertising and $75 for insurance. The advertising is paid in cash, but the insurance will be paid in cash later. 4. Purchases a new storage facility for $600, on credit. 5. Pays the warehouse employees $200 in cash. 6. Pays interest of 5% on its loan, in cash. 9. The company's accountant calculates that as a result of the above transactions, the company will have to pay tax of $100 at a later date. 10. Finally, the board of directors decides to pay a dividend of $50 (the dividend is not paid by the end of the fiscal year). On the following page, you are given a worksheet for Bluberty's second fiscal year. Fill in the opening balances (from the end of the first year) and record the transactions during the second year. Calculate closing balances and then, using the formats given, construct a closing balance sheet and an income statement. + Opening balances Purchase inventory Sales Cost of sales Insurance Advertising Purchase storage fac. Salaries Interest Pay accounts payable Collect accounts rec. Tax Dividend Transfer retained earnings Closing balances Fixed Assets ASSETS TRANSACTION WORKSHEET Invento Acc ry Receiv SHAREHOLDERS' EQUITY Cash Comm Ret Income Stock Earning State LIABILITIES Tax Dividends Bank Acc Loan Payable Payable Payable Income Statement Balance Sheet Sales Cost of Sales Gross Profit Operating Expenses Profit before Interest and Tax Interest Profit Before Tax Tax Profit After Tax CURRENT ASSETS Cash Accounts Receivable Inventory Total Current Assets FIXED ASSETS Plant and Machinery Total Long Term Assets TOTAL ASSETS CURRENT LIABILITIES Accounts Payable Dividends Payable Tax Payable Total Current Liabilities LONG TERM LIABILITIES Bank Loan Total Long Term Liabilities TOTAL LIABILITIES SHAREHOLDERS' EQUITY Common Stock Retained Earnings Total Shareholders' Equity

Answer rating: 100% (QA)

SOLUTION To fill in the worksheet and construct the closing balance sheet and income statement lets go through each transaction step by step 1 Purchases inventory clothing for 700 on credit Increase i... View the full answer