Question 5 IFSA Advisors Ltd is a new entrant to the market for providing
widgets to consumers in Western Australia. As the business commences,
various business activities will occur. Exhibit 1 provides a list of the activities
that have taken place in the first month of operation.
Exhibit 1 – Business Activities for IFSA Advisors, Ltd.
S
L
1 Date Business Activity 2 31/Dec/201
5
4/Jan/2016 3 4/Jan/2016 4 5/Jan/2016 5 11/Jan?
2016 6 14/Jan/2016 7 15/Jan/2016 8 18/Jan/2016 9 20/Jan/2016 1
0 22/Jan/2016 Company capitalised through deposit of $120,000 from the
two owners.
Pay $12,000 to landlord for premises. 50% of the amount is
a refundable deposit, the remainder is the first month’s
rent.
Purchase office equipment for $8,800, of which 6,800 was
paid in cash. The equipment has an estimated life of four
years with no salvage value.
Borrow $24,000 from a friend for working capital. This
interest-free loan must be repaid in 4 years.
Purchase and receive raw materials to manufacture 1,200
widgets at a total cost of $12,000. Payment is due in 30days.
Pay $3,600 to electricity company for 1st quarter power
consumption.
Ship first order to customer consisting of 185 widgets at
$30 per widget. Payment is due in 30-days.
Spend $10,000 on TV and radio advertising during the
month.
Sell 100 widget at $15 per book and send an invoice to the
customer.
Paid cash of $1,000 for wages Using the information provided in Exhibit 1 you are required to do the following:
ii) Prepare an income statement for IFSA Advisors for the period 01 January
2016 – 31 January 2016. Show the detailed elements in income statement.
iii) Prepare a balance sheet statement for IFSA Advisors as at 31 January 2016.
Show the detailed elements in balance sheet.