Financial balances for Ho Ming Wee, Solicitor, on 30 June 2019 are given below in a table in accounting equation form similar to the chapter illustrations.

During the early part of July, the business entered into the following transactions.
1. Paid $2360 on accounts payable.
2. Collected $6400 of the monies owed by clients.
3. Purchased office equipment for $10 200. Paid $1500 in cash and signed a loan agreement for the balance.
4. Billed customers for legal services performed, $8820.
5. Purchased supplies on credit, $1200.
6. Paid expenses in cash, $9400 (advertising, $2000; rent, $6000; wages, $1400).
7. Used $500 of supplies during the period.
8. Collected $6750 of accounts receivable.
9. Ho Ming Wee paid for a $12 000 family holiday to Europe using the firm’s bank account.
Required

(a) List the 30 June balances for assets, liabilities and equity in table form as shown above.

(b) Record the effects of each transaction. Show the total of each column after recording each transaction as illustrated in the text.

(c) Prepare an income statement and a statement of changes in equity for the month and a balance sheet in narrative format as at 31 July 2019.

(d) Discuss if these financial statements are useful for the owner/manager of the business.

Transcribed Image Text:

Assets Cash at Accounts Office Bank + $8000 + Office Receivable + Supplies + Equipment = $13250 + $1000 + $19.875 = Liabilities Accounts Loan Payable + Payable + $2425 + $8750 + Equity Ho Ming Wee, Capital $30 950