Prepare journal entries for each transaction

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Reference no: EM131340771

Sabrina Migliaccio owned and managed a franchise of Caffè Espresso srl. The trial balance on 1 January 2005, the beginning of its accounting period, is listed as follows:

Caffe Espresso srl- trial balance as at 1 January 2005(amount in euro)

	Debit	Credit
Cash and cash equivalents	7,800
Trade and other receivables	75,600
Inventory	233,400
Prepaid rent	12,000
PPE	63,000
Accumulated depreciation		17,250
Trade and other payables		135,000
Issued capital		90,000
Retained earnings		149,550
TOTAL	391,800	391,800

Summarised transactions for January 2005 were:
• Purchase of goods on account, EUR 156,000.
• Sales for cash, EUR 117,750.
• Payments to creditors, EUR 87,000.
• Sales on credit, EUR 114,000.
• Advertising in newspapers, paid in cash, EUR 9,000.
• Cost of sales, EUR 120,000.
• Collections from customers, EUR 99,450.
• Miscellaneous expenses paid in cash, EUR 24,000.
• Wages paid in cash, EUR 27,000.
• Entry for rent expense. (Rent was paid quarterly in advance, EUR 18,000 per quarter. Payments were due on 1 March, 1 June, 1 September and 1 December.)
• Depreciation of PPE, EUR 750.

(a) Enter the 1 January 2005 balances in a general ledger.

(b) Prepare journal entries for each transaction.

(d) Prepare an income statement for the month ended 31 January 2005 and a balance sheet as at 31 January 2005.

Reference no: EM131340771

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