Problem
Santa Paula Fruit Company is a fruit wholesaler, specializing in avocados. The company was formed in late 2017 and is 100% owned by Andy Avocado. The company buys from growers and sells to grocery stores. The company's balance sheet at December 31, 2017 was as follows:
During January of 2018, the company had the following transactions:
1.Sold fruit for $130,000 on account to a grocery store
2.Grocery store customer returned $8,000 of fruit as spoiled
3.Purchase $70,000 of fruit from a grower for $70,000 on account
4.Returned $5,000 of fruit purchase to the grower as spoiled
5.Paid $3,000 by check to pay for freight-in costs related to fruit inventory
6.Paid rent of $10,000 by check for the month of January
On January 31, 2018, the ending avocado inventory of the company was counted at $66,000.
Instructions: Prepare an Income Statement for the company for the month of January and also prepare a Statement of Owner's Equity using the multi step technique on both the income statement and the statement of owners equity.
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Assets
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Liabilities and Owner's Equity
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Cash
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$ 30,000
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Accounts Payable
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$50,000
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Inventory
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80,000
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Capital, A. Avocado
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60,000
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Total Assets
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$110,000
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Total Liabilities and Equity
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$110,000
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