Question

In: Accounting

James Tanson, a retired army officer, opened Tanson's Catering service. As his accountant, analyze the transactions...

James Tanson, a retired army officer, opened Tanson's Catering service. As his accountant, analyze the transactions listed next and present them in proper form.

a. The analysis of the transactions by using the expanded accounting equation.

b. A balance sheet showing the position of the firm before opening for business on October 31, 201X.

c. An income statement for the month of November.

d. A statement of owner's equity for November.

e. A balance sheet as of November 30, 201X

201X

Oct .25 James Tanson invested $20,000 in the catering business from his personal savings account.

       27 Bought equipment for cash from Munroe Co., $2,300.

       28 Bought additional equipment on account from Ryan Co., $2,000.

       29 Paid $900 to Ryan Co. as partial payment of the October 28 transaction.

(You should now prepare your balance sheet as of Octeber 31, 201X.)

Nov. 1   Catered a graduation and immediately collected cash, $1,300.

        5   Paid salaries of employees, $800.

       8   Prepared desserts for customers on account, $500.

    10    Received $250 cash as partial payment of November 8 transaction.

   15     Paid telephone bill, $400.

   17    Paid his home electric bill from the company's checkbook , $160.

   20    Catered a wedding and received cash, $1,800.

  25     Bought additional equipment on account, $1,200.

28      Rent expense due but unpaid, $650.

30      Paid supplies expense, $300.

Solutions

Expert Solution

a.

Assets = Liabilities + Equity
Date Cash + Acounts + Equipment = Accounts + Capital - Drawings + Retaied earnings
Receivable Payable Revenue - Expenses
Service - Salaries + Rent + Supplies
revenue Expense Expense Expense
Oct.25 20000 + + = + 20000 - + - + +
Oct.27 -2300 + + 2300 = + - + - + +
Oct.28 + + 2000 = 2000 + - + - + +
Oct.29 -900 + + = -900 + - + - + +
Balance 16800 + 0 + 4300 = 1100 + 20000 - + - + +

b.

Tanson's Catering Services
Balance sheet as at October 31, 201X
Assets
Cash 16800
Equipment 4300
Total assets 21100
Liabilities and equity
Accounts payable 1100
Capital 20000
Total liabilities and equity 21100

a.

Assets = Liabilities + Equity
Date Cash + Acounts + Equipment = Accounts + Capital + Drawings + Retaied earnings
Receivable Payable Revenue + Expenses
Service + Salaries + Telephone + Rent + Supplies
revenue Expense Expense Expense Expense
Balance 16800 + 0 + 4300 = 1100 + 20000 + + + + + +
Nov.1 1300 + + = + + + 1300 + + + +
Nov.5 -800 + + = + + + + -800 + + +
Nov.8 + 500 + = + + + 500 + + + +
Nov.10 250 + -250 + = + + + + + + +
Nov.15 -400 + + = + + + + + -400 + +
Nov.17 -160 + + = + + -160 + + + + +
Nov.20 1800 + + = + + + 1800 + + + +
Nov.25 + + 1200 = 1200 + + + + + + +
Nov.28 + + = 650 + + + + + + -650 +
Nov.30 -300 + + = + + + + + + + -300
Balance 18490 + 250 + 5500 = 2950 + 20000 + -160 + 3600 + -800 + -400 + -650 + -300

c.

Tanson's Catering Services
Income statement
for the month ending November 30, 201X
Service revenue 3600
Expenses:
Salary expense 800
Telephone expense 400
Rent expense 650
Supplies expense 300
Total expenses 2150
Net income 1450

d.

Tanson's Catering Services
Statement of owners' equity
as at November30, 201X
Capital as at November 1 20000
Drawings -160
Net income for November 1450
Capital as at November 30 21290

e.

Tanson's Catering Services
Balance sheet as at November 30, 201X
Assets
Cash 18490
Accounts receivable 250
Equipment 5500
Total assets 24240
Liabilities and equity
Accounts payable 2950
Capital 21290
Total liabilities and equity 24240

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