Fraser Baker opened Baker's Accounting Service in Winnipeg on September 1, 2017. On September 30, the balance

Question:

Fraser Baker opened Baker's Accounting Service in Winnipeg on September 1, 2017. On September 30, the balance sheet showed Cash $5,700; Accounts Receivable $2,100; Supplies $350; Equipment $7,600; Accounts Payable $4,300; and F. Baker, Capital $11,450. During October, the following transactions occurred:

Oct. 1 Paid $3,800 of the accounts payable.

1 Paid $900 rent for October.

4 Collected $1,550 of the accounts receivable.

5 Hired a part-time office assistant at $80 per day to start work the following week.

8 Purchased additional equipment for $4,000, paying $500 cash and signing a note payable for the balance.

14 Performed $900 of accounting services on account.

15 Paid $300 for advertising.

18 Collected $400 from customers who received services on October 14.

20 Paid $500 for family dinner celebrating Fraser's son's university graduation.

25 Borrowed $8,000 from the Manitoba Bank on a note payable.

26 Sent a statement reminding a customer that he still owed the company money from September.

28 Earned revenue of $5,400, of which $3,100 was paid in cash and the balance was due in November.

29 Paid the part-time office assistant $720 for working nine days in October.

29 Received $2,800 cash for accounting services to be performed in November.

30 Received the telephone bill for the month, $205.

30 Withdrew $1,200 cash for personal expenses.

Instructions

(a) Beginning with the September 30 balances, prepare a tabular analysis of the effects of the October transactions on the accounting equation.

(b) Prepare an income statement and statement of owner's equity for October, and a balance sheet at October 31.

TAKING IT FURTHER

Fraser is confused about the accounting treatment of the October 20 transaction. Explain the reason for this treatment.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...