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Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23

Assets = Liabilities + Owner's Equity

Assets = Liabilities +
Accounts Accounts
Cash Receivable Supplies Equipment Payable
1) $ 15,000
2) (7,000) 7,000
3) 1,600 1,600
4) 1,200
5) 250
6) 1,500 2,000
7) (1,700)

5, 8) (250) (250)
6, 9) 600 (600)
10) (1,300)

$ 8,050 $ 1,400 $ 1,600 $ 7,000 $ 1,600


$ 18,050

summation of assets summation of liabilities


& owner's equity
$ 18,050 $ 18,050

$ 18,050

Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23

Income Statement
month ending September 30, 2012

Revenues
Service Revenues $ 4,700

Expenses
Salaries & Wages Expense (900)
Rent Expense (600)
Advertising Expense (250)
Utilities Expense (200)
Total Expenses (1,950)

Net Income $ 2,750

Owner's Equity Statement


month ending September 30, 2012

Owner's Capital, September 1 0


Add: Investments $ 15,000
Add: Net Income $ 2,750
17,750
Less: Drawings $ (1,300)
Owner's Capital, September 30 16,450

Investment by Owner
Drawings by Owners

net change in cash

cash at beginning of pe
cash at end of period
Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23

Owner's Equity
Owner's -Owner's
Capital Drawings Revenues -Expenses
$ 15,000 Initial Investment
Equipment on cash
Supplies on Credit
1,200 Service Revenue
(250) Advertising Expense
3,500 Service Revenue
(900) Salaries & Wage Expense
(600) Rent Expense
(200) Utilities Expense

(1,300)

$ 15,000 $ (1,300) $ 4,700 $ (1,950)


$ 18,050

owner's cap/draw net income


$ 13,700 $ 2,750

summation of owner's equity


$ 16,450 $ 16,450

Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23

Balance Sheet
month ending September 30, 2012

Assets
Cash $ 8,050
Accounts Receivable 1,400
Supplies 1,600
Equipment 7,000
Total Assets $ 18,050

Liabilities & Owner's Equity


Liabilities
Accounts Payable $ 1,600
Owner's Equity
Owner's Capital 16,450
Total Liabilities & Owner's Equity $ 18,050

Statement of CashFlows
month ending September 30, 2012

Cash Flows from Operating Activities


cash receipts from revenues $ 3,300
cash payments for expenses (1,950)
Net Cash Provided by Operating Activities $ 1,350

Cash Flow from Investing Activities


Purchase of Equipment $ (7,000) paid cash so put it here

Cash Flow from Financing Activities


Investment by Owners 15,000
Drawings by Owners (1,300)
$ 13,700

net change in cash $ 8,050

cash at beginning of period $ -


cash at end of period $ 8,050
Chapter 1, Transaction Analysis & Financial Statements, pages 15 - 23

Transactions

1) initial investment by owner, $15,000 cash, equal increase in assets


and owner's equity

2) purchase of equipment for $7,000 cash, equal increases and decrease

3) purchase of supplies on $1,600 credit, assets and liabilities increase

4) services provided for $1,200 cash, revenue increases owner's equity

5) purchased advertising on $250 credit, increased liabilities and


decreased owner's equity (expense)

6) services provided for $1,500 cash and $2,000 credit


equal increase in assets and owners equity

7) payment of $1,700 expenses equal decrease in assets and expenses


equal decrease in assets and owner's equity

8) payment of accounts payable (from #5) payment of $250 bill in cash


equal decrease in cash and accounts payable

9) receipt of cash on account (from #6) received $600 in cash


composition of assets changed

10) withdrawl of $1,300 in cash by owner


equal decrease in assets and owner's equity
so put it here
Chapter 1, Transaction Analysis & Financial Statements, pages 21

Assets = Liabilities + Owner's Equity

Assets = Liabilities + Owner's Equity


Accounts Accounts Owner's
Cash Receivable Supplies Equipment Payable Capital

1) $ 25,000 $ 25,000
2) 7,000 7,000
3) 8,000
4) (850)
5) (1,000)

$ 31,150 $ - $ - $ 7,000 $ 7,000 $ 25,000

summation of assets summation of liabilities owner's cap/draw


& owner's equity $ 24,000
$ 38,150 $ 38,150
summation of owner's equity
$ 38,150 $ 31,150

Chapter 1, Transaction Analysis & Financial Statements, pages 21 Chapter 1, Transaction Analysis

Income Statement Balance Sheet


month ending August 31, 2012 month ending August 31, 2012

Revenues Assets
Service Revenues $ 8,000 Cash
Accounts Receivable
Expenses Supplies
Salaries & Wages Expense - Equipment
Rent Expense (850) Total Assets
Advertising Expense -
Utilities Expense - Liabilities & Owner's Equity
Total Expenses (850) Liabilities
Accounts Payable
Net Income $ 7,150 Owner's Equity
Owner's Capital
Total Liabilities & Owner's Equit
Owner's Equity Statement
month ending August 31, 2012
Statement of CashFlows
Owner's Capital, September 1 0 month ending August 31, 2012
Add: Investments 25,000
Add: Net Income 7,150 Cash Flows from Operating Acti
32,150 cash receipts from revenues
Less: Drawings (1,000) cash payments for expenses
Owner's Capital, September 30 $ 31,150 Net Cash Provided by Operating

Cash Flow from Investing Activi


Purchase of Equipment

Cash Flow from Financing Activi


Investment by Owners
Drawings by Owners

net change in cash

cash at beginning of period


cash at end of period
Owner's Equity
-Owner's
Drawings Revenues -Expenses

cash
equpment on credit
8,000 service provided
(850) rent expense
(1,000) cash withdrawal

$ (1,000) $ 8,000 $ (850)

owner's cap/draw net income


$ 7,150

ummation of owner's equity


$ 31,150

Chapter 1, Transaction Analysis & Financial Statements, pages 21

Balance Sheet
month ending August 31, 2012

$ 31,150
Accounts Receivable -
-
7,000
Total Assets $ 38,150

iabilities & Owner's Equity

Accounts Payable $ 7,000


Owner's Equity
Owner's Capital 31,150
Total Liabilities & Owner's Equity $ 38,150

Statement of CashFlows
month ending August 31, 2012

Cash Flows from Operating Activities


cash receipts from revenues $ 8,000
cash payments for expenses (850)
Net Cash Provided by Operating Activities $ 7,150

Cash Flow from Investing Activities


Purchase of Equipment $ -

Cash Flow from Financing Activities


Investment by Owners 25,000
Drawings by Owners (1,000)
$ 24,000

net change in cash $ 31,150

ash at beginning of period $ -


ash at end of period $ 31,150
Chapter 1, - pages 21

Transactions

1) Initial Investment by Owner, $25,000 Cash


Equal Increase in Assets and Owner's Equity

2) Purchase of Equipment for $7,000 Credit


Equal Increase in Total Assets and Total Liabilities

3) Services provided for $8,000 Cash


Total Assets, Cash increased
Revenue Increases Owner's Equity

4) Payment of $850 Rent Expenses, Cash


Equal Decrease in Assets and Expenses
Equal Decrease in Assets and Owner's Equity

5) WithDrawl of $1,000 in cash by Owner


Equal Decrease in Assets and Owner's Equity
Equipment paid on credit so it is zero

we start with zero


Chapter 1, Transaction Analysis & Financial Statements, pages 25

Income Statement Flannagan Company


month ending December 31, 2012

Revenues
Service Revenues $ 36,000

Expenses

Rent Expense (11,000)


Salaries & Wages Expense (7,000)
Utilities Expense (4,000)
Total Expenses (22,000)

Net Income $ 14,000

Balance Sheet Flannagan Company


month ending December 31, 2012

Assets
Cash $ 8,000
Accounts Receivable 9,000
Supplies -
Equipment 10,000
Total Assets $ 27,000
-
Liabilities & Owner's Equity
Liabilities
Accounts Payable $ 2,000
Note Payble 16,500
Owner's Equity $ 18,500
Owner's Capital 8,500
Total Liabilities & Owner's Equity $ 27,000

Presented below is selected information related to Flanagan Company at December


31, 2012. Flanagan reports fi nancial information monthly.
Equipment $10,000 Utilities Expense $ 4,000
Cash 8,000 Accounts Receivable 9,000
Service Revenue 36,000 Salaries and Wages Expense 7,000
Rent Expense 11,000 Notes Payable 16,500
Accounts Payable 2,000 Owner’s Drawings 5,000
(a) Determine the total assets of Flanagan Company at December 31, 2012.
(b) Determine the net income that Flanagan Company reported for December 2012
(c) Determine the owner’s equity of Flanagan Company at December 31, 2012
Chapter 1, Transaction Analysis & Financial Statements, pages 26-27

Assets = Liabilities + Owner's Equity

Assets = Liabilities +
Accounts Notes Accounts
Cash Receivable Supplies Equipment Payable Payable

1) $ 11,000
2) (800)
3) 3,000 3,000
4) 1,500
5) 700 700
6) 2,000
7) (500)
(300)
(100)
8 (1,000)

$ 10,500 $ 2,000 $ - $ 3,000 $ 700 $ 3,000


Total Assets $ 15,500 Total liability$ 3,700

summation of assets summation of liabilities


& owner's equity
$ 15,500 $ 15,500

$ 15,500

Chapter 1, Transaction Analysis & Financial Statements, pages 26-27

Income Statement
month ending July 31, 2012

Revenues
Service Revenues $ 3,500

Expenses
Rent Expense (800)
Salaries & Wages Expense (500)
Utilities Expense (300)
Supplies Expense (100)
Total Expenses (1,700)
Net Income $ 1,800

Owner's Equity Statement


Owner's Capital July 1st, 2012

Owner's Capital, September 1 $0


Add: Investments 11,000
Add: Net Income 1,800
12,800
Less: Drawings (1,000)
Owner's Capital, July 31 $ 11,800
Chapter 1, Transaction Analysis & Financial Statements, pages 26-27

Owner's Equity
Owner's -Owner's
Capital Drawings Revenues -Expenses

$ 11,000
(800) Rent Expense
Equipment on credit
1,500 Service Revenue
borrowed cash
2,000 Service Revenue
(500) expense
(300) expense
(100) expense
(1,000)

$ 11,000 $ (1,000) $ 3,500 $ (1,700)


$ 11,800

owner's cap/draw net income


$ 10,000 $ 1,800

summation of owner's equity


$ 11,800 $ 11,800

Chapter 1, Transaction Analysis & Financial Statements, pages 26-27

Balance Sheet
month ending July 31, 2012

Assets
Cash $ 10,500
Accounts Receivable 2,000
Supplies -
Equipment 3,000
Total Assets $ 15,500

Liabilities & Owner's Equity


Liabilities
Notes Payable $ 700
Accounts Payable $ 3,000
Total Liabilities 3,700
Owner's Equity
Owner's Capital 11,800
Total Liabilities & Owner's Equity $ 15,500

Statement of CashFlows
month ending July 31, 2012

Cash Flows from Operating Activities


cash receipts from revenues $ 1,500
cash payments for expenses (1,700)
Net Cash Provided by Operating Activities $ (200)

Cash Flow from Investing Activities


Purchase of Equipment $ -

Cash Flow from Financing Activities


Investment by Owners 11,000
Proceeds from debt $ 700
Drawings by Owners (1,000)
$ 10,700

net change in cash $ 10,500

cash at beginning of period $ -


cash at end of period $ 10,500
Chapter 1, - pages 26 - 27

Transactions (July 2012)

1) Initial Investment by Owner, $11,000 Cash


Equal Increase in Assets and Owner's Equity

2) Payment of $800 Rent Expense (July 2012)


Equal Decrease in Assets and Expenses
Equal Decrease in Assets and Owner's Equity

3) Purchase of Equipment on $3,000 Credit


Assets and Liabilities Increase

4) Legal Services provided for $1,500 Cash


Revenue Increases Owner's Equity

5) Borrowed $700 Cash from Bank on Note Payable


6) Legal Services provided for $2,000 Credit
Accounts Receivable Increases
Revenue Increases Owner's Equity

7) Payment of $900 Expense (July 2012)


Equal Decrease in Assets and Expenses
Equal Decrease in Assets and Owner's Equity

8) WithDrawl of $1,000 in cash by Owner


Equal Decrease in Assets and Owner's Equity
Chapter 1, Transaction Analysis & Financial Statements, pages 37

Assets = Liabilities + Owner's Equity

Assets = Liabilities +
Accounts Accounts
Cash Receivable Supplies Equipment Payable

1) $ 15,000
2) (2,000) 5,000 $3,000
3) (750) 750
4) 4,600 3,900
5) (1,500) (1,500)
6) (2,000)
7) (650)
8 450 (450)
9 (4,800)
10 500
$ 8,350 $ 3,450 $ 750 $ 5,000 $ 2,000

summation of assets summation of liabilities


& owner's equity
$ 17,550 $ 17,550

$ 17,550

Chapter 1, Transaction Analysis & Financial Statements, pages 37

Income Statement
month ending August 31, 2012

Revenues
Service Revenues $ 8,500

Expenses
rent Expense (650)
salary Expense (4,800)
utilities Expense (500)

Total Expenses (5,950)

Net Income $ 2,550


Owner's Equity Statement
month ending August 31, 2012

Owner's Capital, September 1 0


Add: Investments 15,000
Add: Net Income 2,550
17,550
Less: Drawings (2,000)
Owner's Capital, September 30 $ 15,550
Chapter 1, Transaction Analysis & Financial Statements, pages 37

Owner's Equity
Owner's -Owner's
Capital Drawings Revenues -Expenses

$ 15,000

supplies
8,500 Service Revenue

(2,000) Ownerss drawing


(650) rent Expense
accounts receivable
(4,800) salaries expense
(500) Utilities expense
$ 15,000 $ (2,000) $ 8,500 $ (5,950) $ 15,550

owner's cap/draw net income


$ 13,000 $ 2,550

summation of owner's equity


$ 15,550 $ 15,550

Chapter 1, Transaction Analysis & Financial Statements, pages 37

Balance Sheet
month ending August 31, 2012

Assets
Cash $ 8,350
Accounts Receivable 3,450
Supplies 750
Equipment 5,000
Total Assets $ 17,550

Liabilities & Owner's Equity


Liabilities
Accounts Payable $ 2,000
Owner's Equity
Owner's Capital 15,550
Total Liabilities & Owner's Equity $ 17,550

Statement of CashFlows
month ending August 31, 2012

Cash Flows from Operating Activities


cash receipts from revenues $ 5,050
cash payments for expenses (7,700)
Net Cash Provided by Operating Activities $ (2,650)

Cash Flow from Investing Activities


Purchase of Equipment $ (2,000)

Cash Flow from Financing Activities


Investment by Owners 15,000
Drawings by Owners (2,000)
$ 13,000

net change in cash $ 8,350

cash at beginning of period $ -


cash at end of period $ 8,350
Chapter 1, Transaction Analysis & Financial Statements, pages 37

Transactions (August 2012)

1) Initial Investment by Owner, $15,000 Cash


Equal Increase in Assets and Owner's Equity

2) Purchase of Equipment on $5,000 ($2,000 Cash, $3,000 Credit)


Assets and Liabilities Increase

3) Purchase of supplies on $750 Cash


Assets increased and decreased

4) Revenues of $8,500 earned $4,600 Cash ans $3,900 Credit


Revenue Increases Owner's Equity
Cash and Accounts Receivable Increases

5) Paid $1,500 Cash on Accounts Payable


Equal Decrease in Assets and Owner's Equity

7) Payment of $650 Rent Expense (August 2012)


Equal Decrease in Assets and Expenses
Equal Decrease in Assets and Owner's Equity

8) Received / Collected $450 Cash on Account


Assets increased and decreased

9) Payment of $4,800 Expenses (August 2012)


Equal Decrease in Assets and Expenses
Equal Decrease in Assets and Owner's Equity

10) Incurred $500 of Utilities Expenses on Account


Liabilities Increased, Equity / Expenses Decreased
Problem Set P1 - A1
Chapter 1, Transaction Analysis & Financial Statements, page 39 Chapter 1, Transaction An

Assets = Liabilities + Owner's Equity

a) Assets = Liabilities + Owner's


Accounts Accounts Owner's
Cash Receivable Supplies Equipment Payable Capital

1) $ 10,000 $ 10,000
2) (5,000) 5,000
3) (400)
4) (500) 500
5) 250
6) 6,100
7) (1,000)
8) (2,000)
9) (170)
10) 750
10,11) 120 (120)

$ 7,150 $ 630 $ 500 $ 5,000 $ 250 $ 10,000

summation of assets = summation of liabilities owner's cap/draw


& owner's equity $ 9,000
$ 13,280 $ 13,280
summation of owner's equ
$ 13,280 $ 13,030
b) Net Income is $4,030

Chapter 1, Transaction Analysis & Financial Statements, page 39 Chapter 1, Transaction An

Income Statement Balance Sheet


month ending May 31, 2012 month ending May 31, 2012

Revenues Assets
Service Revenues $ 6,850 Cash
Accounts Receivable
Expenses Supplies
Salaries & Wages Expense (2,000) Equipment
Rent Expense (400) Total Assets
Advertising Expense (250)
Utilities Expense (170) Liabilities & Owner's Equit
Total Expenses (2,820) Liabilities
Accounts Payable
Net Income $ 4,030 Owner's Equity
Owner's Capital
Total Liabilities & Owner's
Owner's Equity Statement
month ending May 31, 2012
Statement of CashFlows
Owner's Capital, May 1 0 month ending May 31, 2012
Add: Investments $ 10,000
Add: Net Income $ 4,030 Cash Flows from Operating
$ 14,030 cash receipts from revenu
Less: Drawings $ (1,000) cash payments for expens
Owner's Capital, May 31 $ 13,030 Net Cash Provided by Oper

Cash Flow from Investing A


Purchase of Equipment

Cash Flow from Financing A


Investment by Owners
Drawings by Owners

net change in cash

cash at beginning of period


cash at end of period
Chapter 1, Transaction Analysis & Financial Statements, page 39

Owner's Equity
-Owner's
Drawings Revenues -Expenses

Initial Investment
Equipment cash
(400) Rent Expense cash
Supplies cash
(250) Advertising Expense on account
6,100 Service Revenue cash
(1,000) Owners Drawing
(2,000) Salaries & Wage Expense cash
(170) Utilities Expense cash
750 Service Revenue
received cash $120 from $750

$ (1,000) $ 6,850 $ (2,820)

owner's cap/draw net income


$ 4,030

summation of owner's equity


$ 13,030

Chapter 1, Transaction Analysis & Financial Statements, page 39

Balance Sheet
month ending May 31, 2012

$ 7,150
Accounts Receivable 630
500
5,000
Total Assets $ 13,280
Liabilities & Owner's Equity

Accounts Payable $ 250


Owner's Equity
Owner's Capital 13,030
Total Liabilities & Owner's Equity $ 13,280

Statement of CashFlows
month ending May 31, 2012

Cash Flows from Operating Activities


cash receipts from revenues $ 6,220
cash payments for expenses (3,070)
Net Cash Provided by Operating Activities $ 3,150

Cash Flow from Investing Activities


Purchase of Equipment $ (5,000)

Cash Flow from Financing Activities


Investment by Owners 10,000
Drawings by Owners (1,000)
$ 9,000

net change in cash $ 7,150

cash at beginning of period 0


cash at end of period $ 7,150
Problems: Set A – assignments

Transactions

P1-1A Threet’s Repair Shop was started on May 1 by Erica Threet.


A summary of May transactions is presented below.
1. Invested $10,000 cash to start the repair shop.
2. Purchased equipment for $5,000 cash.
3. Paid $400 cash for May office rent.
4. Paid $500 cash for supplies.
5. Incurred $250 of advertising costs in the Beacon News on account.
6. Received $6,100 in cash from customers for repair service.
7. Withdrew $1,000 cash for personal use.
8. Paid part-time employee salaries $2,000.
9. Paid utility bills $170.
10. Provided repair service on account to customers $750.
11. Collected cash of $120 for services billed in transaction (10).

Instructions
(a) Prepare a tabular analysis of the transactions, using the
following column headings: Cash, Accounts Receivable,Supplies,
Equipment, Accounts Payable, Owner’s Capital, Owner’s Drawings,
Revenues, and Expenses
(b) From an analysis of the owner’s equity columns,
compute the net income or net loss for May.
Ans - Net income = $4030
Problem Set P1 - 1B
Chapter 1, Transaction Analysis & Financial Statements, page 41 Chapter 1, Transaction An

Assets = Liabilities + Owner's Equity

a) Assets = Liabilities + Owner's


Accounts Accounts Owner's
Cash Receivable Supplies Equipment Payable Capital

1) $ 15,000 $ 15,000
2) (600)
3) (3,000) 3,000
4) 700
5) (800) 800
6) 3,000 7,000
7) (500)
4, 8) (500) (500)
9) (2,500)
6, 10) 4,000 (4,000)
$ 14,100 $ 3,000 $ 800 $ 3,000 $ 200 $ 15,000

summation of assets = summation of liabilities owner's cap/draw


& owner's equity $ 14,500
$ 20,900 $ 20,900
summation of owner's equ
$ 20,900 $ 20,700

Chapter 1, Transaction Analysis & Financial Statements, page 41 Chapter 1, Transaction An

Income Statement Balance Sheet


month ending April 30, 2012 month ending April 30, 2012

Revenues Assets
Service Revenues $ 10,000 Cash
Accounts Receivable
Expenses Supplies
Salaries & Wages Expense (2,500) Equipment
Rent Expense (600) Total Assets
Advertising Expense (700)
Liabilities & Owner's Equit
Total Expenses (3,800) Liabilities
Accounts Payable
Net Income $ 6,200 Owner's Equity
Owner's Capital
Total Liabilities & Owner's
Owner's Equity Statement
month ending April 30, 2012
Statement of CashFlows
Owner's Capital, April 1 0 month ending April 30, 2012
Add: Investments $ 15,000
Add: Net Income $ 6,200 Cash Flows from Operating
$ 21,200 cash receipts from revenu
Less: Drawings $ (500) cash payments for expens
Owner's Capital, April 1 $ 20,700 Net Cash Provided by Oper

Cash Flow from Investing A


Purchase of Equipment

Cash Flow from Financing A


Investment by Owners
Drawings by Owners

net change in cash

cash at beginning of period


cash at end of period
Chapter 1, Transaction Analysis & Financial Statements, page 41

Owner's Equity
-Owner's
Drawings Revenues -Expenses

Initial Investment
(600) Rent Expense cash
Equipment
(700) Advertising Expense on account
Supplies
10,000 Service Revenue cash+Credit
(500) Owners Drawing
Advertising expense
(2,500) Salaries & Wage Expense cash
Service Revenue
$ (500) $ 10,000 $ (3,800)

owner's cap/draw net income


$ 6,200

summation of owner's equity


$ 20,700

Chapter 1, Transaction Analysis & Financial Statements, page 41

Balance Sheet
month ending April 30, 2012

Accounts Receivable 3,000


800
3,000
Total Assets $ 6,800

Liabilities & Owner's Equity


Accounts Payable $ 200
Owner's Equity
Owner's Capital 20,700
Total Liabilities & Owner's Equity $ 20,900

Statement of CashFlows
month ending April 30, 2012

Cash Flows from Operating Activities


cash receipts from revenues $ 7,000
cash payments for expenses (4,400)
Net Cash Provided by Operating Activities $ 2,600

Cash Flow from Investing Activities


Purchase of Equipment $ (3,000)

Cash Flow from Financing Activities


Investment by Owners 15,000
Drawings by Owners (500)
$ 14,500

net change in cash $ 14,100

cash at beginning of period 0


cash at end of period $ 14,100
Problems: Set A – assignments

Transactions

P1-1B
P1-1B On April 1, Vince Morelli established Vince’s Travel Agency. The following transactions
were completed during the month.
1. Invested $15,000 cash to start the agency.
2. Paid $600 cash for April offi ce rent.
3. Purchased offi ce equipment for $3,000 cash.
4. Incurred $700 of advertising costs in the Chicago Tribune, on account.
5. Paid $800 cash for offi ce supplies.
6. Earned $10,000 for services rendered: $3,000 cash is received from customers, and the balance
of $7,000 is billed to customers on account.
7. Withdrew $500 cash for personal use.
8. Paid Chicago Tribune $500 of the amount due in transaction (4).
9. Paid employees’ salaries $2,500.
10. Received $4,000 in cash from customers who have previously been billed in transaction (6).
Instructions
(a) Prepare a tabular analysis of the transactions using the following column headings: Cash,
Accounts Receivable, Supplies, Equipment, Accounts Payable, Owner’s Capital, Owner’s
Drawings, Revenues, and Expenses.
(b) From an analysis of the owner’s equity columns, compute the net income or net loss for April.
dings: Cash,
Problem Set P1 -2A
Chapter 1, Transaction Analysis & Financial Statements, page 39

Assets = Liabilities + Owner's Equity

Assets = Liabilities
Accounts Notes Accounts
Cash Receivable Supplies Equipment Payable Payable
Balance 9,000 1,700 600 6,000 3,600
1) $ (2,900) $ (2,900)
2) 1,300 (1,300)
3) (800) 2,100 1,300
4) 2,500 5,300
5) (1,100)
6) (1,700)
(900)
(450)
7 170
8 10,000 10,000
$ 14,950 $ 5,700 $ 600 $ 8,100 $ 10,000 $ 2,170

summation of assets = summation of liabilities


& owner's equity
$ 29,350 $ 29,350

Chapter 1, Transaction Analysis & Financial Statements, page 39

Income Statement
month ending April 30, 2012

Revenues
Service Revenues $ 7,800

Expenses
Salaries & Wages Expense (1,700)
Rent Expense (900)
Advertising Expense (450)
Utilities expense (170)
Total Expenses (3,220)
Net Income $ 4,580

Owner's Equity Statement


month ending April 30, 2012

Owner's Capital, April 1 0


Add: Investments $ 13,700
Add: Net Income $ 4,580
$ 18,280
Less: Drawings $ (1,100)
Owner's Capital, April 1 $ 17,180
Chapter 1, Transaction Analysis & Financial Statements, page 39

+ Owner's Equity
Owner's -Owner's
Capital Drawings Revenues -Expenses
13,700 Balance forward

Equipment
7,800 Service revenue
(1,100) Owners drawing
(1,700) Salaries
(900) Rent
(450) Advertising
(170) Utilities

$ 13,700 $ (1,100) $ 7,800 $ (3,220)

owner's cap/draw net income


$ 12,600 $ 4,580

summation of owner's equity


$ 17,180 $ 17,180

Chapter 1, Transaction Analysis & Financial Statements, page 39

Balance Sheet
month ending April 30, 2012

Assets
Cash $ 14,950
Accounts Receivable 5,700
Supplies 600
Equipment 8,100
Total Assets $ 29,350

Liabilities & Owner's Equity


Liabilities
Accounts Payable $ 2,170
Notes Payable $ 10,000
Owner's Equity
Owner's Capital 17,180
Total Liabilities & Owner's Equity $ 29,350

Statement of CashFlows
month ending April 30, 2012

Cash Flows from Operating Activities


cash receipts from revenues $ 2,500
cash payments for expenses 9,750
Net Cash Provided by Operating Activities $ 12,250

Cash Flow from Investing Activities


Purchase of Equipment $ (800)

Cash Flow from Financing Activities


Investment by Owners (2,900)
Drawings by Owners (900)
$ (3,800)

net change in cash $ 7,650

cash at beginning of period 0


cash at end of period $ 7,650
Problems: Set A – assignments

Transactions

P1-2A
P1-2A Ramona Castro opened a veterinary business in Nashville, Tennessee, on August 1. On
August 31, the balance sheet showed Cash $9,000, Accounts Receivable $1,700, Supplies $600,
Equipment $6,000, Accounts Payable $3,600, and Owner’s Capital $13,700. During September,
the following transactions occurred.

1. Paid $2,900 cash on accounts payable.


2. Collected $1,300 of accounts receivable.
3. Purchased additional offi ce equipment for $2,100, paying $800 in cash and the balance on
account.
4. Earned revenue of $7,800, of which $2,500 is received in cash and the balance is due in October.
5. Withdrew $1,100 cash for personal use.
6. Paid salaries $1,700, rent for September $900, and advertising expense $450.
7. Incurred utilities expense for month on account $170.
8. Received $10,000 from Capital Bank (money borrowed on a note payable).

(a) Total assets $29,350


(b) Net income $4,580
Ending capital $17,180