4.27Preparing a worksheet

The closing balance sheet items are given below for Jason Woodstock in accounting equation form as at 30 June 2018. Transactions for the following month of July are also given.

Assets

=

Liabilities

+

Equity

Cash at bank + Accounts receivable

=

Accounts payable + Mortgage

+

Capital

$39 400 + $2 800

=

$1 200

+

$41 000

Transactions for July 2018 were as follows:

July

2

Received $2 800 from accounts receivable.

3

Paid $1000 of accounts payable.

4

Paid rent for July $700.

5

Sent invoice to customer $5600.

7

Purchased office equipment for cash $2000.

9

Recorded cash sales $800.

10

Recorded credit sales $1500.

14

Purchased office supplies for cash $330.

23

Cash sales $2000.

31

Drawings by Jason Woodstock $800.

Required

a. Prepare worksheet entries for the business transactions for the month ended 31 July 2018.

b. At the end of July, Jason realised that the customer invoice sent on 5 July was recorded incorrectly. The correct amount should be $6500. Explain what type of error Jason made and explain the impact of this error on the balance sheet and the income statement.

4.28Preparing income statements and balance sheets

Using the information in 4.27, prepare:

a. an income statement for the period ending 31 July 2018

b. a balance sheet as at 31 July 2018.