Problem:

Exercise 1: Recording transactions in journals and ledgers

Anthony Leung opens a retail store called The Bead Shop. During the first month of operation, Anthony makes the following accounting transactions:

1. Invests $100,000 in cash in the business

2. Buys $50,000 worth of equipment on credit he obtained from the bank

3. Buys $60,000 worth of goods from different suppliers, pays $30,000 in cash, and puts the rest on credit

4. Spends $5,000 in cash for advertising

5. Sells $20,000 worth of goods on credit

6. Pays $15,000 in cash for salaries

7. Pays $10,000 to the bank toward the loan

8. Pays $5,000 to a supplier

9. Pays $13,000 for some merchandise that he had purchased on credit

10. Pays a salary of $3,000

a. Use this information to prepare the journal entries. Upload your work as a PDF, image, or Excel file.

b. Use this information to prepare the ledgers. Upload your work as a PDF, image, or Excel file.

c. Use this information to prepare the trial balance. Upload your work as a PDF, image, or Excel file.

Exercise 2: Preparing the statement of income

At the end of December 31, 2012, Cougar Inc.s accounts are as follows: