a. Set up an expanded accounting equation spreadsheet using the following accounts:
|Cash||Accounts Payable||Freedman, Capital|
|Computer Shop||Service Revenue|
|Equipment||Expenses (notate type)|
b. Analyze and record each transaction in the expanded accounting equation.
c. Prepare the financial statements ending July 31 for Sanchez Computer Center.
On July 1, 201X, Tony Freedman decided to begin his own computer service business. He named the business the Sanchez Computer Center. During the first month Tony conducted the following business transactions. Record them into the basic accounting equation.
a. Invested $4,500 of his savings into the business.
b. Paid $1,200 (check #8095) for the computer from Multi Systems, Inc.
c. Paid $600 (check #8096) for office equipment from Office Furniture, Inc.
d. Set up a new account with Office Depot and purchased $250 in office supplies on credit.
e. Paid July rent, $400 (check #8097).
f. Repaired a system for a customer and collected $250.
g. Collected $200 for system upgrade labor charge from a customer.
h. Electric bill due but unpaid, $85.
i. Collected $1,200 for services performed on Taylor Golf computers.
j. Withdrew $100 (check #8098) to take his wife, Carol, out in celebration of opening the new business.
Mike Ackerman decided to open Mike’s Nail Spa. Mike completed the following transactions. Record them into the basic accounting equation.
a. Invested $24,000 cash from his personal bank account into the business.
b. Bought store equipment for cash, $3,700.
c. Bought additional store equipment on account, $6,100.
d. Paid $900 cash to partially reduce what was owed from transaction c.
From the following account balances, prepare in proper form for September (a) an income statement, (b) a statement of owner’s equity, and (c) a balance sheet for Frechette Realty.
Cash $7,050 S. Frechette, Withdrawals $800
Accounts Receivable 1,060 Professional Fees 4,000
Office Equipment 6,700 Salaries Expense 400
Accounts Payable 2,000 Utilities Expense 360
Frechette, Capital, September 1, 201X 10,770 Rent Expense 400
From the following trial balance, identify which statement each title will appear on:
a. Income statement (IS)
b. Statement of owner’s equity (OE)
c. Balance sheet (BS)
|Nov. 30, 201X|
|C. Computer Equipment||1,000|
|D. Accounts Payable||800|
|E. L. Bradford, Capital||200|
|F. L. Bradford, Withdrawals||500|
|G. Legal Fees Earned||1,500|
|H. Consulting Fees Earned||300|
|I. Wage Expense||200|
|J. Supplies Expense||250|
|K. Internet Advertising Expense||150|
SANCHEZ COMPUTER CENTER
The Sanchez Computer Center created its chart of accounts as follows:
Chart of Accounts as of July 1, 201X
|1000||Cash||4000 Service Revenue|
|1030||Supplies||5010 Advertising Expense|
|1080||Computer Shop Equipment||5020 Rent Expense|
|1090||Office Equipment||5030 Utilities Expense|
|Liabilities||5040 Phone Expense|
|2000||Accounts Payable||5050 Supplies Expense|
|Owner’s Equity||5060 Insurance Expense|
|3000||Freedman, Capital||5070 Postage Expense|
You will use this chart of accounts to complete the continuing problem.
The following problem continues. The balances as of July 31 have been brought forward in the working papers that accompany this text.
- Set up T accounts in a ledger.
- Record transactions k through s in the appropriate T accounts.
- Foot and take the balances of the T accounts where appropriate.
- Prepare a trial balance at the end of August.
- Prepare from the trial balance an income statement, statement of owner’s equity, and a balance sheet for the two months ending with August 31, 201X.
- Received the phone bill for the month of July, $155. o Paid $150 (check #8099) for insurance for the month.
- Paid $200 (check #8100) of the amount due from transaction d in Chapter 1. o Paid advertising expense for the month, $1,400 (check #8101).
- Billed a client (Jeannine Sparks) for services rendered, $850. o Collected $900 for services rendered.
- Paid the electric bill in full for the month of July (check #8102, transaction h, Chapter 1).
- Paid cash (check #8103) for $50 in stamps.
- Purchased $200 worth of supplies from Computer Connection on credit.
The chart of accounts of Annis’ Delivery Service is as follows: Cash, 111; Accounts Receivable, 112; Office Equipment, 121; Delivery Trucks, 122; Accounts Payable, 211; Avery Annis, Capital, 311; Avery
Annis, Withdrawals, 312; Delivery Fees Earned, 411; Advertising Expense, 511; Gas Expense, 512; Salaries Expense, 513; and Telephone Expense, 514. Annis’ Delivery Service completed the following transactions during the month of August:
Transaction A: Avery invested $17,000 in the delivery service from her personal savings account.
Transaction B: Bought delivery trucks on account, $11,000.
Transaction C: Bought office equipment for cash, $600.
Transaction D: Paid advertising expense, $350.
Transaction E: Collected cash for delivery services rendered, $3,500.
Transaction F: Paid drivers’ salaries, $900.
Transaction G: Paid gas expense for trucks, $1,700.
Transaction H: Performed delivery services for a customer on account, $1,600.
Transaction I: Telephone expense due but unpaid, $600.
Transaction J: Received $400 as partial payment of transaction H.
Transaction K: Avery withdrew cash for personal use, $250.
As Avery’s newly hired accountant, you must perform the following:
- The T accounts in the ledger have been set up for you. Record transactions in the T accounts. (Place the letter of the transaction next to the entry.)
- Foot the T accounts where appropriate.
- Prepare a trial balance at the end of August.
- Prepare from the trial balance, in proper form, (a) an income statement for the month of August, (b) a statement of owner’s equity, and (c) a balance sheet as of August 31, 201X.
From the trial balance of Gail Lucas, Attorney-at-Law (below) prepare a. An income statement for the month of May
A statement of owner’s equity for the month ended May 31, and c. A balance sheet at May 31, 201X.
|Gail Lucas, Attorney-At-Law|
|May 31, 201X|
|B. Accounts Receivable||750|
|C. Office Equipment||1,250.00|
|D. Accounts Payable||6,200.00|
|E. Sales Payable||770|
|F. G. Lucas, Capital||1,180.00|
|G. G. Lucas, Withdrawals||800|
|H. Revenue from Legal Fees||1,800.00|
|I. Utilities Expense||150|
|J. Rent Expense||500|
|K. Salaries Expense||500|