Concept explainers
(a)
The accounting equation implies the relationship between the assets, liabilities, and the
To show: The effects of each transaction on the accounting equation.
(b)
Income statement:
An income statement is one of the financial statements which shows the revenues, and expenses of the company. The income statement is prepared to ascertain the net income of the company.
To prepare: An income statement for the month of May, 2017.
(c)
Classified
The financial statement with grouping or classification of similar assets and liabilities under subheadings is known as classified balance sheet.
To prepare: A classified balance sheet at May.31, 2017.
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Financial Accounting: Tools for Business Decision Making, 8th Edition
- The Moon Service Inc. engaged in the following transactions during the month of November 2015: 01: Issued 20,000 shares of common stockat $20 per share 03: Paid office rent for the month of November $500. 06: Purchased office supplies $250. 12: Purchased office equipment on account $4,500 16: Purchased business car for $25,000. Paid $10,000 cash and issued a note for the balance. 21: Billed clients $24,000 on account. 25: Declared dividends $3,000. The amount of dividends will be distributed in December. 28: Paid utility bills for the month of November $180. 29: Received $20,000 cash from clients billed on November 21. 30: Paid salary for the month of November $7,500 Required: Record the above transactions in a general journal.arrow_forwardCarlos Ramirez and Camila Garza organized New World Book Store as a corporation; each contributed $80,000 cash to start the business and received 4,000 shares of common stock. The store completed its first year of operations on December 31, 2014. On that date, the following financial items for the year were determined: December 31, 2014, cash on hand and in the bank, $75,600; December 31, 2014, amounts due from customers from sales of books, $39,000; unused portion of store and office equipment, $73,000; December 31, 2014, amounts owed to publishers for books purchased, $12,000; one-year note payable to a local bank for $3,000. No dividends were declared or paid to the stockholders during the year. Complete the following balance sheet as of the end of 2014. 2. What was the amount of net income for the year? (Hint: Use the retained earnings equation [Beginning Retained Earnings + Net Income − Dividends = Ending Retained Earnings] to solve for net income.)arrow_forwardDallas Parsons, CPA, began an accounting practice and completed these transactions during September 2015. Sept 1 Invested $15,000 of his personal savings into a bank account opened in the name of the accounting practice. Sept 2 Purchased office equipment for $12,500, paying $800 cash and agreeing to pay the balance in one year. Sept 3 Rented office space and paid cash for two months in advance, $11,200. Sept 4 Completed accounting work for a client and immediately collected $1,500 in cash for the work done. Sept 8 Purchased office supplies for cash, $150. Sept 15 Completed accounting services for a client on credit, $2,300. Sept 20 Received $2,300 from the above client for the work completed on September 15. Sept 30 Paid utilities expense for month of $1,300. Sept 30 Paid the office secretary's salary, $400. Sept 30 Paid $100 for repairs to the photocopier. Show the effects of the above transactions on the balance sheet items of Dallas Parsons, CA. Use the following…arrow_forward
- Prepare the general journal entries for the following transactions. Mr. Laban Deyro opened his laundry business in Iloilo City on January 2, 2016. The following transactions occurred during the month of January 2016: DATE TRANSACTIONS 1/2/16 Invested PHP500,000 to his business. The trade name 1/3/16 Hired Allan and Allie who will manage his business 1/4/16 Collections from various customers for the day- PHP3,000 1/5/16 of the business was "MR. LABANDERO" Purchase store supplies from Labada Store - PHP10,000 1/7/16 Collections from various customers for the day - PHP8,000 1/8/16 MR. LABANDERO entered into an exclusive contract with Sikat Hotel where the business will do all the laundry of the hotel. 1/9/16 Sikat Hotel availed the services of MR. LABANDERO amounting to PHP15,000. Payment will be made on January 20, 2016. 1/10/16 Collections from various customers for the day- PHP12,000 1/12/16 Purchase a washing machine amounting to PHP50,000 1/15/16 Collections from various customers…arrow_forwardColeman Motors, Inc., was formed on January 1,2018. The following transactions occurred during 2018:On January 1, 2018, Coleman issued its common stock for $350,000. Early in January,Coleman made the following cash payments:a. $140,000 for equipmentb. $175,000 for inventory (five cars at $35,000 each)c. $19,000 for 2018 rent on a store buildingIn February, Coleman purchased six cars for inventory on account. The cost of this inventorywas $282,000 ($47,000 per car). Before year-end, the company paid off $197,400 of this debt.The company uses the first-in, first-out (FIFO) method to account for its inventory.During 2018, Coleman sold six autos for a total of $426,000. Before year-end, it had collected 90% of this amount.The business employs three people. The combined annual payroll is $90,000, of which Coleman owes $5,000 at year-end. At the end of the year, the company paid income taxes of $14,000.Late in 2018, Coleman declared and paid cash dividends of $29,000.For equipment, Coleman…arrow_forwardNancy Tercek started a delivery service, Tercek Deliveries, on June 1, 2017. The following transactions occurred during the month of June. June 1 Stockholders invested $10,000 cash in the business in exchange for common stock. 2 Purchased a used van for deliveries for $14,000. Nancy paid $2,000 cash and signed a note payable for the remaining balance. 3 Paid $500 for office rent for the month. 5 Performed $4,800 of services on account. 9 Declared and paid $300 in cash dividends. 12 Purchased supplies for $150 on account. 15 Received a cash payment of $1,250 for services performed on June 5. 17 Purchased gasoline for $100 on account. 20 Received a cash payment of $1,500 for services provided. 23 Made a cash payment of $500 on the note payable. 26 Paid $250 for utilities. 29 Paid for the gasoline purchased on account on June 17. 30 Paid $1,000 for employee salaries. Show the…arrow_forward
- Nancy Tercek started a delivery service, Tercek Deliveries, on June 1, 2017. The following transactions occurred during the month of June. June 1 Stockholders invested $10,000 cash in the business in exchange for common stock. 2 Purchased a used van for deliveries for $14,000. Nancy paid $2,000 cash and signed a note payable for the remaining balance. 3 Paid $500 for office rent for the month. 5 Performed $4,800 of services on account. 9 Declared and paid $300 in cash dividends. 12 Purchased supplies for $150 on account. 15 Received a cash payment of $1,250 for services performed on June 5. 17 Purchased gasoline for $100 on account. 20 Received a cash payment of $1,500 for services provided. 23 Made a cash payment of $500 on the note payable. 26 Paid $250 for utilities. 29 Paid for the gasoline purchased on account on June 17. 30 Paid $1,000 for employee salaries. 1.-…arrow_forwardLars Linken opened Pina Colada Cleaners on March 1, 2022. During March, the following transactions were completed. Mar. 1 Issued 9,000 shares of common stock for $13,500 cash. 1 Borrowed $5,600 cash by signing a 6-month, 6%, $5,600 note payable. Interest will be paid the first day of each subsequent month. 1 Purchased used truck for $7,700 cash. 2 Paid $1,680 cash to cover rent from March 1 through May 31. 3 Paid $2,580 cash on a 6-month insurance policy effective March 1. 6 Purchased cleaning supplies for $2,200 on account. 14 Billed customers $4,000 for cleaning services performed. 18 Paid $600 on amount owed on cleaning supplies. 20 Paid $1,900 cash for employee salaries. 21 Collected $1,700 cash from customers billed on March 14. 28 Billed customers $4,600 for cleaning services performed. 31 Paid $350 for gas and oil used in truck during month (use Maintenance and Repairs Expense). 31 Declared and paid a…arrow_forwardWernan Peralta, Attorney-at-Law, opened his office on September 1, 2018. The following transactions were completed during the month:A. Deposited P210,000 in the bank in the name of the business.B. Bought office equipment on account from Laguna Corp. P147,000.C. Invested his personal law library into the business, P57,000.D. Paid office rent for the month, P7,600.E. Bought office supplies for cash, P8,850.F. Paid the premium for a one-year fire insurance policy on the equipment and the library, P1,860.G. Received professional fees for services rendered, P24,600.H. Received and paid bill for the use of a landline, P2,280.I. Paid salaries of two part-time legal researches, P9,600.J. Paid car central expense, P2,880.K. Received professional fees for services rendered P21,200.L. Paid Laguna Corp. A portion of the amount owed for the acquisition of the office equipment recorded earlier, P15,000.M. Peralta withdrew cash for personal use,…arrow_forward
- You are the Accountant for Ching Wei Tai, a sole trader business operating downtown, Kingston. The following transactions occurred during the year. 2021 December Started Business with capital of $16,000 in the bank and $13,600 in cash. Bought goods on credit from the following persons: Grant $3,200; Brown $4,800 and Ricketts $3,000 Sold goods on credit to: Marvin $10,000; Jamie $24,800; Ruth $1,800 4. 5 Paid Rent by cash $2,080. 6. Marvin paid us his account by cheque $2000 Jamie paid us $1,400 by cheque. 10 We paid the following by cheque: Grant S1,600; Brown $2,000. 12 Paid Electricity bill by cash $1000 31 The owner, Ching Wei Tai, took $2,400 from the bank for personal use. 31 Required: Enter the following transactions in the Ledger Accounts (T-Accounts) of Ching Wei Tai Balance off the accounts (where appropriate, do the Balance brought down/Balance Brought Forward as at January 1, 2022) Extract a trial balance as at December 31, 2021 for Ching Wei Tai. I. II. IIarrow_forwardJulia Dumars is a licensed CPA. During the first month of operations of her business, Sheffield Corp, the following events and transactions occurred. Stockholders invested $20,200 cash in exchange for common stock. Hired a secretary-receptionist at a salary of $2,500 per month. 3 Purchased $1,800 of supplies on account from Vincent Supply Company. 7 Paid office rent of $880 cash for the month. 11 Completed a tax assignment and billed client $3,000 for services performed. Received $3,300 advance on a management consulting engagement. Received cash of $1,100 for services performed for Orville Co. Paid secretary-receptionist $2,500 salary for the month. Paid 40% of balance due Vincent Supply Company. May 1 2 12 17 31 31 Julia uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 311 Common Stock, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.arrow_forwardThe Naseeb Company began operations on August 1, 2018. The following transactions occur during the month of August. Aug-1 Owners invest $50,000 cash in the corporation in exchange for 5,000 shares of common stock. Aug-1 On the first day of August, $6,000 rent on a building is paid for the months of August and September. Aug-1 $30,000 is borrowed from a local bank, and a note payable is signed. Aug-3 Equipment is purchased for $20,000 cash. Aug-5 Naseeb Inc purchases, for $35,000 on account, an estimated 6-month supplies from Hero Supply. Aug-16 $20,000 cash is loaned to another company, evidenced by a note receivable. Aug-20 Company Receives $30,000 in cash and bills Kinley company $15,000 for services of $45,000 performed in month of August. Aug-25 $8,000 is collected on account from customers. Aug-26 $20,000 is paid on account to Hero supply. Aug-31 Salaries of $7,000 are paid to employees for August.…arrow_forward
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