On March 1, S. Penman (owner) launched AniFoods, Inc., an organic foods retailing company. Following are the transactions for its first month of business.
1. S. Penman (owner) contributed $100,000 cash to the company in return for common stock. Penman also lent the company $55,000. This $55,000 note is due one year hence.
2. The company purchased equipment in the amount of $50,000, paying $10,000 cash and signing a note payable to the equipment manufacturer for the remaining balance.
3. The company purchased inventory for $80,000 cash in March.
4. The company had March sales of $100,000 of which $60,000 was for cash and $40,000 on credit. Total cost of goods sold for its March sales was $70,000.
5. The company purchased future advertising time from a local radio station for $10,000 cash.
6. During March, $7,500 worth of radio spots purchased in transactions 5 are aired. The remaining spots will be aired in April.
7. Employee wages earned and paid during March total $17,000 cash.
8. Prior to disclosing the financial statements, the company recognized that employees had earned an additional $1,000 in wages that will be paid in the next period.
9. The company recorded $2,000 of depreciation for March relating to its equipment.
a) Record the effect of each transaction.
b) Prepare a March income statement and a balance sheet as of the end of March for AniFoods, Inc.