Mary runs a small business selling e-bikes (which are imported from overseas). I
ID: 2547542 • Letter: M
Question
Mary runs a small business selling e-bikes (which are imported from overseas). In February 2018 which was the first month of business Mary had the following transactions
1. Obtained a bank loan for $55,000 repayable in two years time.
2. Purchased inventory for $35,000 and paid $15,000 in cash and the balance to be paid in May 2018.
3. Paid a bond (deposit) of $6,000 on the retail shop that he opened. Mary managed to negotiate 3 months’ rent free period. The bond is repayable when the lease expires at the end of one year.
4. Purchased furniture and equipment for $5,000.
5. Mary paid $15,000 from his personal bank account into the business bank account as capital.
Required:
a) Record the following transactions.
b) Prepare the balance sheet as at 28 February 2018.
Explanation / Answer
a) Journal Entries (Amounts in $)
b) Balance Sheet as at 28 February 2018 (Amounts in $)
Working Notes
1) Calculation of closing balance of cash (Amounts in $)
No. Account Titles Debit Credit 1) Cash 55,000 Bank Loan 55,000 2) Inventory 35,000 Cash 15,000 Accounts Payable (35,000-15,000) 20,000 3) Rent Deposit 6,000 Cash 6,000 4) Furniture and Equipment 5,000 Cash 5,000 5) Cash 15,000 Mary, Capital 15,000