Question

In: Accounting

Jack Thyme opened Thyme Company, a veterinary business on August 1, 2017. On August 31, the...

Jack Thyme opened Thyme Company, a veterinary business

on August 1, 2017. On August 31, the balance sheet showed Cash

$9,000; Accounts Receivable $1,700; Supplies $600; Equipment

$5,000; Accounts Payable $3,600; Common Stock $10,000; and

Retained Earnings $2,700. During September, the following

transactions occurred.

Sept. 2 Paid $3,400 cash for accounts payable due.

5 Received $1,200 from customers in payment of accounts

receivable.

8 Purchased additional office equipment for $5,100, paying

$1,000 in cash and the balance on account.

13 Performed services worth $10,600, of which $2,300 is paid

in cash and the balance is due in October.

17 Paid a $600 cash dividend.

22 Paid salaries $900, rent for September $1,100, and

advertising expense $250.

26 Incurred utility expenses for the month on account $220.

30 Received $5,000 from Ben Bank on a 6-month note

payable.

Instructions

(a) Prepare a tabular analysis of the September transactions

beginning with August 31 balances. The column headings should

be: Cash + Accounts Receivable + Supplies + Equipment = Notes

Payable + Accounts Payable + Common Stock + Retained

Earnings + Revenues – Expenses – Dividends. Include margin

explanations for any changes in Retained Earnings.

(b) Prepare an income statement for September, a retained earnings

statement for September, and a classified balance sheet at

September 30, 2017.

Analyze transactions

and prepare an income

statement, retained

earnings statement, and

balance sheet.

Solutions

Expert Solution

(a)

accounting equation :

date cash AR Supplies Equip = NP AP CS RE Rev Exp Div
OB 9000 1700 600 5000 = 3600 10000 2700
Sep 2 -3400 = -3400
5 1200 -1200 =
8 -1000 5100 = 4100
13 2300 8300 = 10600= 10600
17 -600 = -600 = -600
22 -2250 = -2250 = -2250
26 = 220 -220 = -220
30 5000    = 5000            
Total 10250 8800 6000 10100 = 5000 4520 10000 10230= 10600 2470 600

(b)

Income Statement :

revenue $10600
Less:
salaries 900
rent 1100
advertisement 250
Utility

220

Total expenses 2470
Net Income 8130
Less: Divided -600
To Retained Earnings 7530

Balance Sheet :

Assets Amount $
Cash 10250
AR 8800
Supplies 600
Equipment 10100
Total Assets 29750
Liabilities and SH Equity: Amount $
AP 4520
NP 5000
CS 10000
RE = 2700 + Net Income 7530 - Div 600= 10230
Total Liabilities and SH Equity= $29750

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