Question

Sanyu Sony started a new business and completed these transactions during December.

Dec.		1		Sanyu Sony transferred $68,000 cash from a personal savings account to a checking account in the name of Sony Electric.
		2		The company rented office space and paid $1,100 cash for the December rent.
		3		The company purchased $14,800 of electrical equipment by paying $6,600 cash and agreeing to pay the $8,200 balance in 30 days.
		5		The company purchased office supplies by paying $700 cash.
		6		The company completed electrical work and immediately collected $1,400 cash for these services.
		8		The company purchased $2,900 of office equipment on credit.
		15		The company completed electrical work on credit in the amount of $6,700.
		18		The company purchased $310 of office supplies on credit.
		20		The company paid $2,900 cash for the office equipment purchased on December 8.
		24		The company billed a client $800 for electrical work completed; the balance is due in 30 days.
		28		The company received $6,700 cash for the work completed on December 15.
		29		The company paid the assistant’s salary of $1,300 cash for this month.
		30		The company paid $540 cash for this month’s utility bill.
		31		Sanyu Sony withdrew $990 cash from the company for personal use.

2.1. Prepare an income statement for the current month.

2.2. Prepare a statement of owner's equity for the current month.

2.3. Prepare a balance sheet as of the end of the month.

3. Prepare a statement of cash flows for the current month. (Cash outflows should be indicated with a minus sign.)

Answer 1

2.1

SONY ELECTRIC
Income statement
for the current month
Service Revenue	8900
Expenses:
Rent Expense	1100
Salary Expenses	1300
Utility Expenses	540
Total Expenses	2940
Net income	5960

2.2

SONY ELECTRIC
Statement of owner's equity
for the current month
Beginning Balance	0
Income for the month	5960
Dividends paid	-990
Ending Balance	4970

2.3

SONY ELECTRIC
Balance Sheet
as at the end of current month
Assets
Cash	61970
Accounts Receivable	800
Office Supplies	1010
Electrical Equipment	14800
Office Equipment	2900
Total Assets	81480
Liabilities and equity
Accounts Payable	8510
Owner's capital	72970
Total liabilities and equity	81480

3.

SONY ELECTRIC
Statement of cash flow
for the current month
Cash flow from operations:
Net income	5960
Increase in accounts receivable	-800
Increase in office supplies	-1010
Increase in accounts payable	8510
Cash flow from operations	12660
Cash flow from investing activities
Purchase of electrical equipment	-14800
Purchase of office equipment	-2900
Cash flow from investing activities	-17700
Cash flow from financing activities
Issue of equity	68000
Payment of dividends	-990
Cash flow from financing activities	67010
Net cash flows	61970
Increase in cash balance	61970
Beginning cash balance	0
Ending cash balance	61970

Working:

SONY ELECTRIC
Worksheet for the month ended December
	Transactions		Trial Balance		Income Statement		Balance Sheet
Account	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	76100	14130	61970				61970
Accounts Receivable	7500	6700	800				800
Office Supplies	1010		1010				1010
Electrical Equipment	14800		14800				14800
Office Equipment	2900		2900				2900
Accounts Payable	2900	11410		8510				8510
Sanyu Soni, Capital		68000		68000				72970
Sanyu Soni, Drawings	990		990
Service Revenue		8900		8900		8900
Rent Expense	1100		1100		1100
Salary Expenses	1300		1300		1300
Utility Expenses	540		540		540
Total	109140	109140	85410	85410	2940	8900	81480	81480
Income Summary					5960
Grand Total	109140	109140	85410	85410	8900	8900	81480	81480