Reference no: EM132631228

The Shoolongela Farm is a farming food store started by Moose Shoolongela on 1 January 2016. The transactions below relate to The Moose Soolongela for the first three months of trading in 2016:

January

Contribution of cash into a bank account by Moose Shoolengela to start business entity N$ 100 000

Bought furniture fixtures and fittings, and paid in cash N$ 21 000

Bought inventory on credit from Organic foods N$ 50 000

Sold goods for cash cost (cost price N$ 6000) N$ 9 000

February

Bought furniture, fixtures and fittings on credit from Shop Fitters N$ 18 000

Paid for advertising in cash N$ 4 000

Cash sales (cost price N$ 8 000) N$ 13 000

Returned unsuitable inventory to Organic Foods N$ 500

Paid wages in cash N$ 1 500

March

Cash sales (cost price N$ 7 500) N$ 10 000

Sold goods on credit (cost price 6 000) N$ 8 000

Paid Organic foods in cash N$ 40 000

Distribution to owner in cash N$ 5 000

The fixtures and fittings purchased in January were acquired at the beginning of the month, as were those acquired in February. Moose Shoolengela estimates that the useful life of all the fixtures and fittings is ten years and that they will have no value at the end of that time.

You are required to:

Problem a) Record the above transaction on an accounting equation worksheet using the following headings: Bank, Inventory, Accounts receivable, Furniture, Accounts payable, Capital, Income, Expenses and Distributions.

Problem b) Prepare statement of profit or loss for The Moose Shoolengela for the period ended 31 March 2016.

Problem c) Prepare statement of financial position for The Moose Shoolengela at 31 March 2016. The accounting equation is Assets=capital +liabilities