Suppose you began a business as a wholesaler of Auto Parts In Lisbon. The following events have occurred (the symbol € represents the euro, the European currency):
1. On March 1, 20X1, you invested €80,000 cash in your new sole proprietorship, which you call Autopartes Lisbon.
2. You acquired €10,000 inventory for cash.
3. You acquired €8,000 inventory on open account.
4. You acquired equipment for €15,000 in exchange for a €5,000 cash down payment and a €10,000 promissory note.
5. A large retail store, which you had hoped would be a big customer, discontinued operations.
6. You take tires home for your family car. Autopartes Lisbon’s inventory carried the tires at €600. (Regard this as taking part of your capital out of Autopartes Lisbon.)
7. Parts that cost €300 in transaction 2 were damaged in shipment. You returned them and obtained a full cash refund.
8. Parts that cost €800 in transaction 3 were the wrong size. You returned them and obtained parts of the correct size in exchange.
9. Parts that cost €500 in transaction 3 had an unacceptable quality. You returned them and obtained full credit on your account.
10. You paid €2,000 on the promissory note.
11. You use your personal cash savings of €5,000 to acquire some equipment for Autopartes Lisbon. You consider this to be an additional investment in your business.
12. You paid €3,000 on open account.
13. Two transmission manufacturers who are suppliers for Autopartes Lisbon announced a 7% rise in prices, effective in 60 days.
14. You use your personal cash savings of €1,000 to acquire a new TV set for your family.
15. You exchange equipment that cost €4,000 in transaction 4 with another wholesaler. However, the equipment received which is almost new, is smaller and is worth only €1,500. Therefore, the other wholesaler also pays you €2,500 in cash. (You recognize no gain or loss on this transaction.)

1. By using Exhibit as a guide, prepare an analysis of Autopartes Lisbon’s transactions for March. Confine your analysis to the effects on the financial position of Autopartes Lisbon.

2. Prepare a balance sheet for Autopartes Lisbon as of March 31, 20X1.

  • CreatedFebruary 20, 2015
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