Preparation and presentation of Financial Statements Jayne O’Rourke – Architect, commenced business as a sole trader on 1st April 2014. Opening balances of the businesses accounts on 1st May 2014 were: Account Balance Cash $3,890 Accounts Receivable 6,600 Office supplies 3,120 Office Equipment 9,400 Account Payable 210 Bank Loan, 7,000 Equity 15,800 The following transactions occurred during May 2014: May 1 O’Rourke invested $15,000 cash in the business 1 Purchased insurance policy for $1,200 for one year’s cover of office equipment 3 Paid $1,000 cash for May and June rent of premises 5 Purchases office supplies costing $249 on credit (on account) 10 O’Rourke withdrew $500 cash from the business for personal use 15 Revenue of $1,530 cash and $64 credit earned 18 Paid supplier of office supplies $249 19 Paid advertising expense for June for $190 24 Paid salaries of $4,000 28 Received cash of $280 for work to be performed in June 2014 29 Revenue of $1,325 cash and $55 credit earned 30 Paid telephone expense of $64 cash Additional end of month information for Jayne O’Rourke – Architect: 1. O’Rourke uses the allowance of doubtful debts method to account for bad debts; the percentage of credit sales method is used to estimate the amount that will be uncollected; O’Rourke applies a rate of 2% on the outstanding balance of the debtors account at month end. 2. Interest expense of $350 has accrued at the end of the month on the bank loan. 3. A bill for Internet use of $430 has not been paid. 4. Salaries accrued for the last 4 days of May amount to $920. 5. Of the office equipment insurance, at the end of May one month’s insurance has been used. Required: (a) Complete a worksheet for the month of May for Jayne O’Rourke – Architect, including any final adjustments (40 marks). (b) Prepare the statement of comprehensive income and the balance sheet for the month of May, 2014 (10 marks). Book Bazley, M & Hancock, P; Contemporary Accounting (8th edition) Cengage Learning Australia Pty Ltd ISBN 978 0 17