Mr.Ajay decided to operate a hot dog stand near a football stadium during the football season. The following transactions describe the financial effects of his activities in setting up the business and operating it for one week.

a)He deposited Rs.300 in the second national bank

b)He rented a site, paying Rs.45for the right to use the location on the following three Saturdays

c)A tent and other equipments were purchased for Rs.110 from a bankrupt concern; a cheque was issued in payment.

d)Merchandise was purchased from Mr.Ranjan worth Rs.305; Mr. Ajay Paid Rs100 (By cheque) and promised to pay the balance on Monday after the first game.

e)All the merchandise was sold for cash on the first Saturday, and Mr.Ajay Deposited the total receipt (Rs.650) in his bank account.

f)Mr. Ajay decided that one-third of the rent payment was applicable to the business done at the first game and that the tent and equipment would have a cash value of Rs47 at the end of the third saturday, which was the last game of the season.After that game ,Mr.Ajay intended to leave this business.

g)On Monday, Mr.Ajay paid the balance due to Mr.Ranjan in full

Questions:

1)Summarize the effects of these transactions on the assets liabilities, and owner’s equity of Mr.Ajay’s hot dog business ,using the format illustrated. Indicate clearly the assets, the liabilities and the owners equities.

2)Prepare a balance sheet as as of Monday night, after all the aforementioned information has been Collected.

3)Prepare an income statement for the period that ended on Monday night.

Answer rating: 100% (QA)

1 Effects of the transactions Assets Liabilities Owners Equity Cash P... View the full answer