Wasago Is in Its First Year of Operation, and the Bookkeeper

question 98

Essay

Wasago is in its first year of operation, and the bookkeeper has prepared the following summary of all of their accounts and balances as at August 31, 2012.Prepare a proper balance sheet for Wasago
Corporation. $\begin{array}{llll}\text { Accounts payable } & 26,000 & \text { Investment by } \\\text { Accounts receivable } & 36,000 & \text { shareholders } & 25,000\\\text { Bank loan, short-term } & 12,000 & \text { Loans made to company } \\\text { Cash } & 2,000 & \text { by shareholders }\\\text { Income tax expense } & 7,500 & \text { Operating expenses } & 182,500 \\\text { Income taxes payable } & 7,500 & \text { Office equipment } & 45,000 \\\text { Insurance paid in advance } & 5,000 & \text { Sales revenues } & 212,500 \\\text { Inventory } & 30,000 & &\end{array}$

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Definitions:

Insurance Policy

A contract between an insurer and policyholder specifying the terms and conditions under which the insurer agrees to compensate the policyholder for specified losses.

Paid

Refers to the status of an account or invoice on which the due amount has been settled.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period of time, illustrating the company's financial performance.