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.
(c) Post the journal entries to the general ledger.
(d) Prepare an income statement for the month ended 31 January 2005 and a balance sheet as at 31 January 2005.