Question

After several months of planning, Denise Murphy started a property management business for

the for the properties that its owners invest called ABC Property Management (“ABC”). The

following events occurred during its first month:

1. On May 1, Murphy started the firm, investing $3,000 cash and $15,000 of equipment.
2. On May 2, ABC paid $600 cash for furniture for the shop.
3. On May 3, ABC paid $500 cash to rent space in a strip mall for May.
4. On May 4, ABC purchased $1,200 of equipment on credit for the shop (using a long-term note payable).
5. On May 5, ABC opened for business. Cash received from services provided in the first week and a half of business (ended May 15) is $825.
6. On May 15, it provided $100 of property management services on account (invoiced).
7. On May 17, it received a $100 check for services previously rendered on account.
8. On May 17, it paid $125 to an assistant for work during the store opening.
9. Cash received from services provided during the second half of May is $930.
10. On May 31, it paid an $400 installment toward principal on the note payable entered into on May 4.
11. On May 31, it paid $900 cash dividends to Murphy.

1. Set-up T-accounts for each of the accounts and post the journal entries completed in Homework 2 to those T-accounts (Please note it is the same Problem as in Homework 2).
2. Prepare a simplified balance sheet and income statement.

Answer 1

Date/No	Account	Dr/Cr	Amount
May-01	Cash	Debit	3000
	Equipment	Credit	15000
	Capital	Credit	18000
May-02	Furniture	Debit	600
	Cash	Credit	600
May-03	Rent Expense	Debit	500
	Cash	Credit	500
May-04	Equipment	Debit	1200
	Note Payable	Credit	1200
May-05	Cash	Debit	825
	Revenue	Credit	825
May-15	Accounts Receivable	Debit	100
	Revenue	Credit	100
May-17	Cash	Debit	100
	Accounts Receivable	Credit	100
May-17	Wages Expense	Debit	125
	Cash	Credit	125
May-17	Cash	Debit	930
	Revenue	Credit	930
May-31	Note Payable	Debit	400
	Cash	Credit	400
May-31	Dividend	Debit	900
	Cash	Credit	900

Revenues & Gains
	Sales Revenue	1855
	Total Revenues and Gains	1855
Expenses & Losses
	Rent Expense	500
	Wages Expense	125
	Dividend	900
	Total Expenses & Losses	1525
Net Income		330

Assets		Liability and Equity
Cash	2330	Note Payable	800
Equipment	16200	Capital	18000
Furniture	600	Net Income	330
	19130		19130