On November 1 of the current year, Richard Parker established a sole proprietorship. The following transactions occurred during the month:…

On November 1 of the current year, Richard Parker established a sole proprietorship. The following transactions occurred during the month: 1: Parker invested $19,000 into the business. 2: Paid $9,000 to acquire a used minivan. 3: Purchased $1,800 of office furniture on account. 4: Performed $2,100 of consulting services on account. 5: Paid $300 of repair expenses. 6: Received $800 from clients who were previously billed in item 4. 7: Paid $500 on account to the supplier of office furniture in item 3. 8: Received a $150 electric bill, to be paid next month. 9: Parker withdrew $600 from the business. 10: Received $250 in cash from clients for consulting services rendered. Instructions a. Arrange the following asset, liability, and owner’s equity elements of the account¬ing equation: Cash, Accounts Receivable, Office Furniture, Van, Accounts Payable, Investments/Withdrawals, and Revenues/Expenses.  b. Record each transaction on a separate line. After all transactions have been recorded, compute the balance in each of the preceding items. c. Answer the following questions for Parker. (1) How much does the company owe to its creditors at month-end? On which financial statement(s) would this information be found? (2) Did the company have a “good” month from an accounting viewpoint? Briefly explain.  

 

Question 2:

The transactions that follow

relate to Burton Enterprises for March 20X1, the company’s first month of activity.

 

3/1: Joanne Burton, the owner invested $20,000 into the business.

3/4: Performed $2,400 of services on account.

3/7: Acquired a small parcel of land by paying $6,000 cash.

3/12: Received $700 from a client, who was billed previously on March 4.

3/15: Paid $800 to the Journal Herald for advertising expense.

3/18: Acquired $9,000 of equipment from Park Central Outfitters by paying

$7,000 down and agreeing to remit the balance owed within the next

2 weeks, (Accounts Payable).

3/22: Received $300 cash from clients for services.

3/24: Paid $1,500 on account to Park Central Outfitters in partial settlement

of the balance due from the transaction on March 18.

3/28: Rented a car from United Car Rental for use on March 28. Total charges

amounted to $75, with United billing Burton for the amount due.

3/31: Paid $900 for March wages.

3/31: Processed a $600 cash withdrawal from the business for Joanne Burton.

 

Instructions

a. Determine the impact of each of the preceding transactions on Burton’s assets,

liabilities, and owner’s equity. Use the following format:

 

Assets                                                                         = Liabilities                      + Owner’s Equity

Cash, Accounts Receivable, Land, Equipment       Accounts Payable       (+)Investments (+) Revenues

            (-) Withdrawals  (-) Expenses

 

a. Record each transaction on a separate line. Calculate balances only after the last transaction has been recorded.

b. Prepare an income statement, a statement of owner’s equity, and a balance sheet, 

 

 

 

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