Question
In: Accounting
On May 1, Marty's Repair Shop Itd. began operations . The following transactions were completed during...
On May 1, Marty's Repair Shop Itd. began operations . The following transactions were completed during the month: 1) Issued common shares for $8,000 cash. 2) Paid $1,280 for May office rent . 3) Purchased equipment for $16,000, paying $4.000 cash and signing a bank loan payable for the balance . 4) Purchased supplies on account , $700. 5) Received $4,200 from customers for repair services provided . 6) Paid for supplies purchased in transaction 4. 7) Paid May telephone bill of $200. 8. Provided repair services on account to customers , $3,600 9) Paid employee salaries , $2,000. 10) Received $700 in advance for repair services to be provided next month 11) Collected $1,600 from customers for services billed in transaction 8. 12) Declared and paid $500 of dividends to shareholders. 13) Paid $80 of Interest on the bank loan obtained in transaction 3. 14) Paid income tax of $600
Instructions (a) Prepare an equation analysis of the effects of the above transactions on the expanded accounting equation (b) Calculate total assets, liabilities, and shareholders' equity at the end of the month and net income for the month
Solutions
Expert Solution
1.
| Stockholders Equity | |||||||||||||||||||||
| Assets | = | Liabilities | + | Income Statement | |||||||||||||||||
| Cash | + | Equipment | + | Supplies | + | Accounts Receivable | = | Accounts Payable | + | Bank Loan | + | Unearned Revenue | + | Common Stock | + | Retained Earnings | + | Revenue | - | Expenses | |
| 1 | 8,000.00 | + | + | + | = | + | + | + | 8,000.00 | + | + | - | |||||||||
| 2 | - 1,280.00 | + | + | + | = | + | + | + | + | + | - | 1,280.00 | |||||||||
| 3 | - 4,000.00 | + | 16,000.00 | + | + | = | + | 12,000.00 | + | + | + | + | - | ||||||||
| 4 | + | + | 700.00 | + | = | 700.00 | + | + | + | + | + | - | |||||||||
| 5 | 4,200.00 | + | + | + | = | + | + | + | + | + | 4,200.00 | - | |||||||||
| 6 | - 700.00 | + | + | + | = | - 700.00 | + | + | + | + | + | - | |||||||||
| 7 | - 200.00 | + | + | + | = | + | + | + | + | + | - | 200.00 | |||||||||
| 8 | + | + | + | 3,600.00 | = | + | + | + | + | + | 3,600.00 | - | |||||||||
| 9 | - 2,000.00 | + | + | + | = | + | + | + | + | + | - | 2,000.00 | |||||||||
| 10 | 700.00 | + | + | + | = | + | + | 700.00 | + | + | + | - | |||||||||
| 11 | 1,600.00 | + | + | + | = | + | + | + | + | + | 1,600.00 | - | |||||||||
| 12 | - 500.00 | + | + | + | = | + | + | + | + | - 500.00 | + | - |
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