In: Accounting
The accountant for the firm owned by Randy Guttery prepares
financial statements at the end of each month. The following
transactions for Randy Guttery, Landscape Consultant took place
during the month ended June 30, 2019.
Transactions:
Guttery invested $140,000 in cash to start the business.
Paid $4,000 for the current month’s rent.
Bought office furniture for $14,720 in cash.
Performed services for $9,200 in cash.
Paid $1,050 for the monthly telephone bill.
Performed services for $15,000 on credit.
Purchased a computer and copier for $34,000; paid $11,000 in cash immediately with the balance due in 30 days.
Received $7,500 from credit clients.
Paid $2,000 in cash for office cleaning services for the month.
Purchased additional office chairs for $3,800; received credit terms of 30 days.
Purchased office equipment for $20,000 and paid half of this amount in cash immediately; the balance is due in 30 days.
Issued a check for $7,400 to pay salaries.
Performed services for $15,500 in cash.
Performed services for $17,000 on credit.
Collected $6,000 on accounts receivable from charge customers.
Issued a check for $1,900 in partial payment of the amount owed for office chairs.
Paid $500 to a duplicating company for photocopy work performed during the month.
Paid $1,020 for the monthly electric bill.
Guttery withdrew $7,000 in cash for personal expenses.
Required:
Prepare a trial balance, an income statement, a statement of
owner’s equity, and a balance sheet. Assume that the transactions
took place during the month ended June 30, 2019. Determine the
account balances before you start work on the financial
statements.
Analyze:
What is the change in owner’s equity for the month of June?
Landscape Consultant
Journal Entries
(For the month June,2019)
Particular | Debit | Credit |
---|---|---|
Cash | 140,000 | |
Capital | 140,000 | |
Rent expenses | 4,000 | |
Cash | 4,000 | |
Furniture | 14,720 | |
Cash | 14,720 | |
Cash | 9,200 | |
Service revenue | 9,200 | |
Telephone Expenses | 1,050 | |
Cash | 1,050 | |
Accounts receivable | 15,000 | |
Service revenue | 15,000 | |
Computer & copier | 34,000 | |
Cash | 11,000 | |
Accounts payable | 23,000 | |
Cash | 7,500 | |
Accounts receivable | 7,500 | |
Cleaning Expenses | 2,000 | |
Cash | 2,000 | |
Chairs | 3,800 | |
Accounts payable | 3,800 | |
Office equipment | 20,000 | |
Cash | 10,000 | |
Accounts payable | 10,000 | |
Salaries Expenses | 7,400 | |
Bank | 7,400 | |
Cash | 15,500 | |
Service revenue | 15,500 | |
Accounts receivable | 17,000 | |
Service revenue | 17,000 | |
Cash | 6,000 | |
Accounts receivable | 6,000 | |
Accounts payable | 1,900 | |
Bank | 1,900 | |
Photocopy Expenses | 500 | |
Cash | 500 | |
Electric bill Expenses | 1,020 | |
Cash | 1,020 | |
Drawings | 7,000 | |
Cash | 7,000 | |
Ledger accounts
Cash
Items | amount | Items | amount |
---|---|---|---|
Capital | 140,000 | Rent Expenses | 4,000 |
Service revenue | 9,200 | Furniture | 14,720 |
Service revenue | 15,500 | Telephone expenses | 1,050 |
Accounts receivable | 6,000 | computer& copier | 11,000 |
Accounts receivable | 7,500 | Cleaning Expenses | 2,000 |
Office equipment | 10,000 | ||
Photocopy Expenses | 500 | ||
Electric bill | 1,020 | ||
Drawings | 7,000 |
Balance CD 126,910
Capital
Cash | 140,000 | ||
Balance CD | 140,000 |
Rent expenses
Cash | 4,000 | ||
Balance CD | 4,000 |
Furniture
Cash | 14,720 | ||
Balance CD | 14,720 |
Service revenue
Cash | 9,200 | ||
Accounts receivable | 15,000 | ||
Cash | 15,500 | ||
Accounts receivable | 17,000 | ||
Total | 56,700 | ||
Balance CD | 56,700 |
Accounts payable
Computer & copier | 23,000 | ||
Bank | 1,900 | Chairs | 3,800 |
Balance | 34,900 | Office equipment | 10,000 |
Total | 36,800 | Total | 36,800 |
Balance CD | 34,900 |
Accounts receivable
Service revenue | 15,000 | Cash | 7,500 |
Service revenue | 17,000 | Cash | 6,000 |
Balance | 18500 | ||
Total | 32,000 | Total | 32,000 |
Balance CD 18,500
Bank
Salaries expenses | 7,400 | ||
Accounts payable | |||
Balance CD | 9300 |
Trial balance
items | Debit | Credit |
---|---|---|
Cash | 126,910 | |
Bank | 9,300 | |
Furniture | 14,720 | |
Computer& copier | 34,000 | |
Chairs | 3,800 | |
Accounts receivable | 18,500 | |
Rent expenses | 4,000 | |
Telephone expenses | 1,050 | |
Cleaning Expenses | 2,000 | |
Office equipment | 20,000 | |
Salaries expenses | 7,400 | |
Photocopy Expenses | 500 | |
Electric bill Expenses | 1,020 | |
Capital | 140,000 | |
Accounts payable | 34,900 | |
Service revenue | 56,700 | |
Drawings | 7,000 | |
Total | 240,900 | 240,900 |
Income statement
Items | amount | |
---|---|---|
Service revenue | 56,700 | |
Less:- Expenses | ||
Rent expenses | (4,000) | |
Telephone expenses | (1,050) | |
Cleaning Expenses | (2,000) | |
Salaries expenses | (7,400) | |
Photocopy Expenses | (500) | |
Electric bill Expenses | (1,020) | |
Total Expenses | (15,970) | |
Net Income | 40,730 | |
Changes in owner's Equity
Items | amount |
---|---|
Capital in the beginning | 140,000 |
Add:- Net income | 40,730 |
Total | 180,730 |
Less:- Drawings | (7,000) |
Closing balance of owner's equity | 173,730 |
Balance sheet
Items | amount |
---|---|
Assets:- | |
Cash | 126,910 |
Furniture | 14,720 |
Computer& copier | 34,000 |
Chairs | 3,800 |
Office equipment | 20,000 |
Accounts receivable | 18,500 |
Total Assets | 217,930 |
Liabilities:- | |
Owner's equity | 173,730 |
Bank | 9,300 |
Accounts payable | 34,900 |
Total Liabilities | 217,930 |
Analysis of owner's equity is important for business,it should be done analysing on the basis of assets and liabilities, Net income and other tools.
In the above mentioned consultant firm owner's equity changes positive there is not any decreases in capital in the June month.