Question

Russel Smith Pty is a small private start-up company that initially is involved in buying and selling of goods. During the first few days of the company's existence the following transactions occur.

The owner opens a business bank account and deposits $20,000 into it on the 3rd May in order to commence business. $6,000 of the deposit is from the personal funds of the owner and $14,000 is a loan from a family member who expects to be fully repaid with interest within two years.
On 4th May, the company purchases a vehicle for $5,000 paying by cheque.
On 5th May, the company purchased invent

Answer 1

purchased inventory (stock to sell) for $3,000 on 30 days credit.
On 6th May, $2,000 of the loan is repaid.
On 10th May, the owner adds $4,000 of his funds to the business bank account.
On 11th May, the business manages to sell all most all of its inventory for $4,500. This is paid for partly by a cheque for $2,500 and the remainder on credit of 30 days. $500 worth of stock could not be sold at this time.

I need to come up with balance sheets for the 3rd May, 5th May and 11th of May, and an income statement from the 3rd to the 11th of May.

Answer 2

My attempt:

Income statement is pretty simple:

Income: 4,500
Expenditure: 3,000

So Net Profit = 4,500 - 3,000 = 1,500

BALANCE SHEET MAY 3rd:

Assets: 20,000

Liabilities: 14,000

Funds: 6,000

BALANCE SHEET MAY 5th:

Assets: 23,000

Liabilities: 14,000 + 3,000 = 17,000

Funds: 6,000

BALANCE SHEET MAY 11th:

Assets: 23,000 + 500 + (4,500 - 2,500) + 4,000 = 26,500

Liabilities: 12,000 + 3,000 = 15,000

Funds: 6,000 + 4,000 + Net Profit = 6,000 + 4,000 + 1,500 = 11,500

Answer 3

am I correct?