Question

B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the...

B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the bank as capital. The following transactions took place during the first month of operations:

February 3: Purchased supplies for $22,500 in cash.

February 9: Purchased equipment for $255,000, paid $105,000 in cash and the remaining amount will be paid after 10 days.

February 12: Received a bill from Dubai News for advertising amounted to $1,650.

February 14: Paid $24,000 salaries in cash.

February 16: Paid $6,000 utilities expense in cash.

February 17: Provided services to customers for $195,000 in cash.

February 19: Paid $150,000 for equipment purchased on February 9.

February 28: The owner withdrew $7,500 cash for personal use.

Required:

  1. Prepare the trial balance of Snow Company on February 29, 2020.
  2. Prepare the financial statements of Snow Company on February 29, 2020.
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Answer #1

Assuming Cash in hand $45000

Trial Balance

Equipment $255000 Capital $2992500
Purchase $22500 Dubai News $1650
Advertisement $1650 Sales $195000
Salary $24000
Utilities $6000
Cash $75000
Bank $2805000
Total $3144150 Total $3144150

Profit & Loss Account

Purchase $22500 Sales $195000
Advertisement $1650
Salary $24000
Utilities $6000
Net Profit $140850
Total $195000 Total $195000

Balance Sheet

Capital $2992500 Equipment $255000
Dubai News $1650 Cash $75000
Profit $140850 Bank $2805000
Total $3135000 Total $3135000
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