Lynn Barry started her own consulting firm, Barry Consulting, on June 1, 2014. The following transactions occurred during the month of June:
June 1 sold her shares in Big Country Airlines for $7,000, which she deposited in her personal bank account.
1. Transferred $6,000 from her personal account to a business account in the name of Barry Consulting.
2. Paid $900 for office rent for the month.
3. Purchased $545 of supplies on account.
5. Paid $95 to advertise in the County News.
9. Received $3,275 for services provided.
12. Withdrew $600 for personal use.
15 Performed $5,000 of services on account.
17 Paid $1,800 for employee salaries.
21 Received $3,000 for services provided on account on June 15.
22 Paid for the supplies purchased on account on June 3.
25 Signed a contract to provide consulting services to a client for $5,500. Services will be performed and paid for in July.
26 Borrowed $5,500 from the bank and signed a note payable.
29 Used part of the cash borrowed from the bank on June 26 to purchase equipment for $2,150.
30 Paid $150 for telephone service for the month.
30 Received $2,500 from client for consulting to be provided in July.
Instructions
(a) Prepare a tabular analysis of the effects of the above transactions on the accounting equation.
(b) Calculate profit and owner's equity for the month ended June 30.
(c) Prepare a balance sheet at June 30.
TAKING IT FURTHER How should Lynn determine which transactions should be recorded and which ones should not be recorded?