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Question: The Glavits Company opened for business on


The Glavits Company opened for business on Monday, June 1, with inventory of $5,000 and cash in the bank of $7,000. These were its only assets. All start-up financing was provided from the owner's personal funds, and there were no other liabilities. The firm has a line of credit at the bank that enables it to borrow up to $20,000 by writing overdraft checks on its account.
Glavits' terms of sale are net 30, but the new firm must pay its suppliers in 10 days. Employees are the company's only expense. They're paid a total of $1,000 per week each Friday afternoon for the week just ending.
On June 3, the company made a sale of $9,000 out of inventory with a cost of $3,000. On June 10 it received $2,000 of new inventory. There were no other sales or inventory receipts. The company bought a delivery truck paying with a $10,000 check on June 30. The books were closed for the month on Tuesday June 30.
Construct Glavits' income statement and balance sheet for June using the worksheet shown. Ignore taxes for this problem. First enter the beginning balance sheet. Next enter one number two times in each column to reflect the transaction indicated at the top of the column. Note that sometimes the numbers will be additions and sometimes they will be subtractions. Finally add across the page to get the statements for June.
Worksheet Rows Worksheet Columns
1. BALANCE SHEET……………...1. Opening balance sheet
2. Assets……………………………2. Record Sales
3. Cash……………………………...3. Record Cost of Sale
4. Accts. Receivable………………...4. Receive Inventory
5. Inventory………………...............5. Pay for Inventory
6. Fixed Assets (net)………………...6. Buy Truck
7. Total Assets……………………...7. Pay Employees-1st 4 weeks
8. Skip………………………………8. Pay Employees-Last 2 days
9. Liabilities………………………...9. Reclassify cash overdraft as loan
10. Accts. Payable…………………...10. Record Net Income as Income and Equity
11. Accruals…………………………11. Skip
12. Debt………………………...........12. June Statements
13. Equity
14. Total Liab. & Equities
15. Skip
16. INCOME STATEMENT
17. Sales
18. Cost
19. Expense
20. Net Income




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