On March 1, S. Penman (owner) launched AniFoods, Inc., an organic foods retailing company

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.

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