Question

1. Dr. Williams decides to open a real estate company which he names, Comfort Realty, Inc. The following transactions were made over the period:

1. On September 1, 2018, Dr. Godwin invested $17,000 cash in the business
2. On September 3, 2018, Comfort Realty purchases computer equipment for $8,000 cash.
3. On September 4, 2018, Comfort realty purchases for $1,600 from ACME supply company computer paper and other supplies exacted to last several months. ACME agrees to allow Comfort Realty to pay this bill in October
4. On September 10, 2018, Comfort realty receives $3,200 cash from customers for rental services it has provided
5. September 11, 2018, Comfort realty receives a bill for $250 from the daily News for advertising but postpones payment until a later date
6. September 12, 2018, Comfort realty provides $3,500 real estate services for customers. The company receives cash of $1,500 from customers, and it bills the balance of $2,000 on account
7. September 23, 2018, Comfort realty pays its $850 Daily News bill in cash
8. September 28, Comfort realty receives $600 in cash from customers who had been billed for services (item vi)
9. September 29, 2018, Dr. Godwin withdrawals $1,600 in cash from the business for a friend.
10. On September 30, 2018, Comfort Realty pays the following expenses in cash for September: store rent $900, salaries of employees $900, and utilities $900

            As the accountant of the company, you have been asked to do the following:

1. Prepare a summary of transaction. You are to show their effects on the three components of the basic balance sheet accounting equation and specific items within each component
2. Present the income statement, owners’ equity statement, and the balance sheet for the month ended September 30, 2018

Answer 1

Answer:

A) summary of transactions

Accounting equation assets = liabilities + owners equity

summary showing effects on accounting equation

Sept1 - aseets( cash increase) and owners equity increase

Sept3 - assets(fixed assets) increase and asset (cash) decrease

Sept4 - assets( computer paper ) increase and liabilities( payable to ACME ) increase

September 10 - owners equity increase (via profit and loss account) and assets ( cash increase)

Sept 11 - owners equity decrease ( via profit and loss account) and liabilities ( payable to daily news ) increase

Sept 12 - owners equity increase (via profit and loss account) assets increase ( cash (1500) and debtors (2000)) increase

Sept 23 - asset ( cash ) decrease and liabilities ( payable to daily news ) decrease

Sept 28 - asset (cash) increase and assets (debtors ) increase

Sept 29 - assets ( cash) decrease and owners equity decrease (drawings)

Sept 30 - assets ( cash decrease) and owners equity decrease ( via profit and loss account)

INCOME STATEMENT

REVENUES

sales 4700

less EXPENCES

Rent salary and utilities 1700

​​​​​​ advertisement expense 250

NET INCOME. 2750

BALANCE SHEET OF COMFORT REALITY FOR PERIOD SEPTEMBER

Particulars	liabilities	particulars	assets
Owners equity (15000+2750-1300) add netincome less drawings	16450	computer equipment	7000
Payable to acme	1600	Computer paper	1600
		Debtors	1400
		Cash	8050
	18050		18050

As it is a general question no specific format is followed for income statement and balance sheet

computer paper is treated as fixed asset as it is given it will last for several months