Question

Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations.

A/ Create a table with assets = libilities + equity

B/ Prepare the income statement and the statement of owner’s equity for the month of July, and the balance sheet as of July 31

C/ Prepare the statement of cash flows for the month of July.

1- July 1 Reyna Rivera invested $80,000 cash in the company.

2- The company rented office space and paid $700 cash for the July rent.

3- The company purchased roofing equipment for $5,000 by paying $1,000 cash and agreeing to pay the $4,000 balance in 30 days.

4- The company purchased office supplies for $600 cash.

5- The company completed work for a customer and immediately collected $7,600 cash for the work.

6- The company purchased $2,300 of office equipment on credit.

7- The company completed work for a customer on credit in the amount of $8,200.

8-The company purchased $3,100 of office supplies on credit.

9- The company paid $2,300 cash for the office equipment purchased on July

10- The company billed a customer $5,000 for work completed; the balance is due in 30 days.

11- The company received $8,200 cash for the work completed on July 15.

12- The company paid an assistant’s salary of $1,560 cash for this month.

13- The company paid $295 cash for this month’s utility bill.

14- Reyna Rivera withdrew $1,800 cash from the company for personal use.

Answer 1

Note 1: Calculation of Cash

NOte 2:

Income statement and Balance Sheet :

Note : Current month's profit is added to capital. $1,800 withdrawn is deducted from capital.

2. Statement of Owner's equity :

Cash FLow statement ;

Note : Capital invested in the business is a financing activity as it is bringing finance for the company.

Note : Equipment purchased is an investment for the business hence investing activities.

Note : There are some payables for office supplies and equipments created during the month, therefore their adjustment has been done in the Cash flow.

The solution ends here. Please let me know if you have any doubt. Please give your valuable feedback. Thanks