Assume that you began a small business in May 2004 by (1) Investing $10,000 (2) Borrowing $30,000

Question:

Assume that you began a small business in May 2004 by

(1) Investing $10,000

(2) Borrowing $30,000 from a bank.

(3) Purchased equipment for $25,000 cash

(4) Purchased merchandise for $12,000 using cash. During the first month of operations, your company

(5) Sold merchandise for $27,000 in cash.

(6) The cost of merchandise sold during the month was $10,000.

(7) Repaid $300 of the amount borrowed from the bank.

(8) Withdrew $800 from the business for personal use. The name of your business is Sand Dune Trading Company.

Required

A. Record transactions 1–8 using the format illustrated in the chapter.

B. Prepare an income statement for May 2004, the first month of operations.

C. Prepare a balance sheet at the end of the first month.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...