Understanding Information in the Accounting Information System – Jacqueline owns and operates a specialty cosmetics manufacturing firm. Distribution is primarily through boutique shops in regional shopping centers, although some items are sold directly through a network of beauty consultants. Raw materials consist of various lotions, potions, fragrances, oils, and powders. The transactions that occurred during the month of March were entered into the accounting system as follows.
|
ASSETS |
= |
LIABILITIES |
+ |
OWNERS’ EQUITY |
|||
|
Date |
Accounts |
Cash |
Other |
Contributed |
Retained |
||
|
Mar. 1 |
Cash |
10,000 |
|||||
|
Contributed Capital |
1,000 |
||||||
|
Mar. 3 |
Cash |
7,000 |
|||||
|
Notes Payable |
7000 |
||||||
|
Mar. 5 |
Merchandise Inventory |
8,100 |
|||||
|
Cash |
-8,100 |
||||||
|
Mar. 18 |
Cash |
15,250 |
|||||
|
Sales Revenue |
15,250 |
||||||
|
Cost of Goods Sold |
-7,500 |
||||||
|
Merchandise Inventory |
-7,500 |
||||||
|
Mar. 18 |
Wages Expense |
-650 |
|||||
|
Cash |
-650 |
||||||
|
Mar. 23 |
Notes Payable |
-2,500 |
1,300 |
||||
|
Cash |
-2,500 |
||||||
|
Mar. 31 |
Retained Earnings |
5,000 |
-2,000 |
||||
|
Cash |
-2,000 |
||||||
|
Ending Amounts |
19,000 |
+600 |
= |
4,500 |
+ |
10,000 |
+5,100 |
Required
A. Describe each of the firm’s transactions. Specify as much detail about each transaction as you can.
B. Assume an income statement and balance sheet are prepared immediately after the last transaction.
1. What amount of net income would be reported?
2. What total amount of owners’ equity would be reported on the balance sheet?