Question

YAD opened a consultancy office on September 1, 2017. On September 30, the balance sheet showed Cash $5,000, Accounts Receivable $1,500, Supplies $500, Equipment $6,000, Accounts Payable $4,200 and Owner's Capital $8,800. During October, the following transactions occurred.

2/10/2017. YAD purchases computer equipment for $7,000 cash.

13/10/2017. YAD purchases computer paper and other supplies for $1,600 from ABC Supply Company computer expected to last several months. ABC agrees to allow Microsoft to pay this bill in February.

14/10/2017. YAD receives $1,200 cash from customers for programming services it has provided.

25/10/2017. YAD receives a bill for $250 from the Daily News for advertising but postpones payment until a later date.

26/10/2017. YAD provides $3,500 of programming services for customers. The company receives cash of $1,500 from customers, and it bills the balance of $2,000 on account.

27/10/2017. YAD pays the following expenses in cash for January: rent $600, salaries of employees $900 and utilities $200.

28/10/2017 YAD pays its $250 Daily News bill in cash.

29/10/2017 YAD receives $600 in cash from customers who had been billed for services in transaction number 26/10/2017.

Requirements:

1- Show the effect of the above transactions on the accounting equation .

2- Prepare Journal entries to record the above transactions .

3- Prepare the T-accounts for cash, account payable and expenses on January 31, 2017 .

4- Prepare the financial statements (Balance sheet, income statement, owner’s equity statement) .

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Date	Accounts	Debit	Credit
2 Oct	Computer Equipment	$    7,000
2 Oct	Cash		$    7,000
13 Oct	Office Supplies	$    1,600
13 Oct	Accounts Payable		$    1,600
14 Oct	Cash	$    1,200
14 Oct	Service Revenue		$    1,200
25 Oct	Advertising Expense	$       250
25 Oct	Accounts Payable		$       250
26 Oct	Cash	$    1,500
26 Oct	Accounts Receivable	$    2,000
26 Oct	Service Revenue		$    3,500
27 Oct	Rent Expense	$       600
27 Oct	Salaries Expense	$       900
27 Oct	Utility Expense	$       200
27 Oct	Cash		$    1,700
28 Oct	Accounts Payable	$       250
28 Oct	Cash		$       250
29 Oct	Cash	$       600
29 Oct	Accounts Receivable		$       600

	Cash	Accounts Receivable	Office Supplies	Computer Equipment	Accounts Payable	Owner Capital	Revenue	Expense	Net Income
Beginning Balance	$    5,000	$                        1,500	$                  500	$                          6,000	$                   4,200	$             8,800
Oct 2	$   -7,000			$                          7,000
Oct 13			$               1,600		$                   1,600
Oct 14	$    1,200						$    1,200		$         1,200
Oct 25					$                      250			$      250	$           -250
Oct 26	$    1,500	$                        2,000					$    3,500		$         3,500
Oct 27	$   -1,700							$   1,700	$       -1,700
Oct 28	$      -250				$                     -250
Oct 29	$       600	$                          -600
Total	$      -650	$                        2,900	$               2,100	$                        13,000	$                   5,800	$             8,800	$    4,700	$   1,950	$         2,750
		Cash
		Debit		Credit
		Beginning Balance	$               5,000	Oct 2	$                   7,000
		Oct 14	$               1,200	Oct 27	$                   1,700
		Oct 26	$               1,500	Oct 28	$                      250
		Oct 29	$                  600
				Ending	$                      650
		Accounts Receivable
		Debit		Credit
		Beginning Balance	$               1,500	Oct 29	$                      600
		Oct 26	$               2,000
		Ending	$               2,900
		Advertising Expense
		Debit		Credit
		Oct 25	$                  250
		Rent Expense
		Debit		Credit
		Oct 27	$                  600
		Salaries Expense
		Debit		Credit
		Oct 27	$                  900
		Utilities Expense
		Debit		Credit
		Oct 27	$                  200
Income Statement:
Service Revenue		$                        4,700
Less: Expenses
Advertising		$                            250
Rent Expense		$                            600
Salaries Expense		$                            900
Utilities Expense		$                            200
Net Income		$                        2,750
Statement of Owner's Capital:
Beginning Balance		$                        8,800
Add: Net Income		$                        2,750
Ending		$                      11,550
Balance Sheet:
Assets
Cash		$                          -650
Accounts Receivable		$                        2,900
Office Supplies		$                        2,100
Equipment		$                      13,000
Total Assets		$                      17,350
Accounts Payable		$                        5,800
Owner's Capital		$                      11,550
Total Liabilities and Equity		$                      17,350

Revenue	Expense	Net Income
$    1,200		$         1,200
	$      250	$           -250
$    3,500		$         3,500
	$   1,700	$       -1,700
$    4,700	$   1,950	$         2,750

	Cash	Accounts Receivable	Office Supplies	Computer Equipment	Accounts Payable	Owner Capital
Beginning Balance	$    5,000	$                        1,500	$                  500	$                          6,000	$                   4,200	$             8,800
Oct 2	$   -7,000			$                          7,000
Oct 13			$               1,600		$                   1,600
Oct 14	$    1,200
Oct 25					$                      250
Oct 26	$    1,500	$                        2,000
Oct 27	$   -1,700
Oct 28	$      -250				$                     -250
Oct 29	$       600	$                          -600
Total	$      -650	$                        2,900	$               2,100	$                        13,000	$                   5,800	$             8,800