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Session 1

The document presents a financial overview including a balance sheet and income statement detailing assets, liabilities, revenues, and expenses. Key transactions include initial investments, bank borrowing, and sales of T-shirts, leading to a net income of $80. The end-of-year balance shows total assets of $2,080, total liabilities of $800, and shareholders' equity of $1,280.

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14 views5 pages

Session 1

The document presents a financial overview including a balance sheet and income statement detailing assets, liabilities, revenues, and expenses. Key transactions include initial investments, bank borrowing, and sales of T-shirts, leading to a net income of $80. The end-of-year balance shows total assets of $2,080, total liabilities of $800, and shareholders' equity of $1,280.

Uploaded by

archit.tolasaria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Balance sheet Income Statement

Assets Liabilities Contributed Retained Revenues Expenses = Net


Capital Earnings Income
Cash Accounts Inventory PP&E Accumulated Bank COGS Wages Depreciation
receivables depreciation (CA) borrowing
Transactions
1. Initial investment 1200 1,200 1,200
2. Borrowing from bank 800 800 800
3. Purchase of plain white T-shirts 500 -500 500
4. Purchase of printer 1200 -1,200 1,200
5a. Depreciation 100 -100
5b. Wages 100 -100 100
6a. Revenue 60 T-shirts @ $10 / shirt 600 600 600 600
6b. COGS 60 T-shirts [ 700 * 60/100] -420 -420 420 -420
6c. Cash collection for 20 T-shirts 200 -200
7. Salary to admin staff 100 -100 -100 100 -100

Adjustments

End of year balance 300 400 280 1,200 -100 800 1,200 80 80
Entry Transactions Debit Credit
no.
1 Cash 1,200
Capital 1,200
2 Cash 800
Bank borrowing 800
3 Inventory 500
Cash 500
4 PP&E 1,200
Cash 1,200
5a Inventory 100
Accumulated depreciation 100
5b Inventory 100
Cash 100
6a Accounts receivables 600
Sales 600
6b Cost of goods sold 420
Inventory 420
6c Cash 200
Accounts receivable 200
7 Salary expense 100
Cash 100
Cash Inventory Equipment Accounts receivable
Debits Credits Debits Credits Debits Credits Debits Credits
1 1,200 500 3 3 500 420 6b 4 1,200 6a 600 200 6c
2 800 1,200 4 5a 100
6c 200 100 5b 5b 100
100 7

300 280 1,200 400

Capital Bank borrowing


Debits Credits Debits Credits
1200 1 800 2

1,200 800

Sales revenue COGS Accu.Depreciation Salary expense


Debits Credits Debits Credits Debits Credits Debits Credits
600 6a 6b 420 100 5a 7 100

600 420 100 100


Trial balance Income statement
Transactions Debit Credit Sales 600
Cash 300 COGS (420)
Inventory 280 Salary expense (100)
Equipment 1,200 Net income 80
Accounts Receivables 400
Bank borrowing 800
Paid-in-capital 1,200
Sales 600 Beginning RE 0
COGS 420 Net income 80
Accumulated depreciation 100 Dividends 0
Rent expense 100 Closing RE 80
Total 2,700 2,700
Balance sheet
Assets
Cash 300
Receivables 400
Inventory 280
Equipment 1,200
Less: Accumulated depreciation (100)
Equipment, net 1,100
Total assets 2,080

Liabilities and Equity


Bank borrowing 800
Total liabilities 800
Shareholders' equity
Par and paid-in-capital 1,200
RE 80
Total SE 1,280
Total liabilities and SE - 2,080

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