Maxon Ltd. is a new entrant to the market for providing widgets to consumers in Australia. As the business commences, various business activities will occur. Exhibit I provides a list of the activities that have taken place in the first month of operation.

Exhibit 1 - Business Activities for Maxon Ltd.

Using the information provided in Exhibit 1 you are required to do the following:

i) Following the format in Exhibit 6 of your text book, identify the above accounting entries for each business activity.

ii) Prepare an income statement for Maxon Ltd. for the period 01 January 2018 - 31 January 2018. Show the detailed elements in income statement.

iii) Prepare a balance sheet statement for Maxon Ltd. as at 31 January 2018. Show the detailed elements in balance sheet.

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Business Activity Maxon deposited $100,000 of his personal funds in a current account at a bank opened in the name of the business. He also provided equipment of $50,000, which was paid from his personal account. Pay $14,000 to landlord for premises. 50% of the amount is a refundable deposit, the remainder is the first month's rent. Purchase office equipment for $5,000, of which 40% was paid instantly. The equipment has an estimated life of four years with no salvage value. 5-Jan-18 Borrow $25,000 from a friend for working capital. This interest-free loan must be repaid in 4 years. 11-Jan-18 Purchase and receive raw materials to manufacture 1,500 widgets at a total cost of $15,000. Payment is due in 30-days. 14-Jan-18 15-Jan-18 Wages of $500 were paid as well as an account for electricity, $250. Assume that these are costs that were incurred for this month so far. Equipment was purchased at a cost of $16 000, of which $10,000 was paid in cash. A loan payable was given for the remainder of $6 000. Spend $12,000 on TV and radio advertising during the month. 18-Jan-18 21-Jan-18 Hire a consultant to conduct a survey on the needs of the local community. The assistant works a total of 8 hours, at $30p.h., prior to the end of the month but will not be paid until February. 10 31-Jan-18 Delivered 100 widgets at $20 each to the customer on account. SL 1 2 3 4 5 6 7 8 9 Date 1 Jan- 2018 4-Jan-18 4-Jan-18 Business Activity Maxon deposited $100,000 of his personal funds in a current account at a bank opened in the name of the business. He also provided equipment of $50,000, which was paid from his personal account. Pay $14,000 to landlord for premises. 50% of the amount is a refundable deposit, the remainder is the first month's rent. Purchase office equipment for $5,000, of which 40% was paid instantly. The equipment has an estimated life of four years with no salvage value. 5-Jan-18 Borrow $25,000 from a friend for working capital. This interest-free loan must be repaid in 4 years. 11-Jan-18 Purchase and receive raw materials to manufacture 1,500 widgets at a total cost of $15,000. Payment is due in 30-days. 14-Jan-18 15-Jan-18 Wages of $500 were paid as well as an account for electricity, $250. Assume that these are costs that were incurred for this month so far. Equipment was purchased at a cost of $16 000, of which $10,000 was paid in cash. A loan payable was given for the remainder of $6 000. Spend $12,000 on TV and radio advertising during the month. 18-Jan-18 21-Jan-18 Hire a consultant to conduct a survey on the needs of the local community. The assistant works a total of 8 hours, at $30p.h., prior to the end of the month but will not be paid until February. 10 31-Jan-18 Delivered 100 widgets at $20 each to the customer on account. SL 1 2 3 4 5 6 7 8 9 Date 1 Jan- 2018 4-Jan-18 4-Jan-18

Answer rating: 100% (QA)

Date Account Title Dr Amt in Cr Amt in 01012018 Bank Ac Dr 100000 Equipement Ac Dr 50000 Capital Ac ... View the full answer