Three classmates have decided to pool a variety of work experiences by opening

Three classmates have decided to pool a variety of work experiences by opening a clothin store.

The following transactions accurred during April:

1.On April 1 each friend invested Rs. 9000 in cash in exchange for 1000 shares of stock each.

2.The enterprise quickly acquired Rs 50000 in inventory half of which had to be paid for i ncash. The other half was acquired on

open accounts that were payable after 30 days.

3.A store was rented for Rs.500 monthly. A lease was signed for one year on April 1. The first two months rent was paid in

advance. Other payments were to be made on the second of each month.

4.Advertising during April was purchased on open account for Rs 3000 from a newspaper owned by one of the stockholders.

Additional advertising services of Rs6000 were acquired for cash.

5.Sales were Rs65000.The average markup above the cost of the erchandise was two-thirds of cost. Eighty percent of the sales

were on open account.

6.Wages and salaries incurred in April amounted to Rs 11000 of which Rs 5000 was paid.

7.Miscellaneous services paid for in cash were Rs 1410.

8.On april 1 fixtures and equipment were purchased for Rs6000. with a down payment of Rs 1000 plus a Rs 5000 note payable

in one year.

9.See Transaction 8 and make the April 30 adjutments for inerest expense accured at 9.6%.(The interest is not due until the note

matures.)

10.See transaction 9 and make adjustment for depreciation expense on a straight-line basis. The estimated life of the fixtures and

equipment is ten years with no expected terminal scrap value.

11.Cash dividends of Rs.300 were declared and disbursed to stockholders on April 29.

Prepare T account Balance sheet income statement. and statement of retained earnings. Which ratio are
appropriate for analyzing the health of this newly formed enterprise?Why?