MiraCom incurred the following transactions during July 2014, its first month of operations:
July 1 The owner, Mira Delco, invested $5,000 cash.
10 Purchased $2,500 worth of equipment on credit.
12 Performed services for a client and received $10,000 cash.
14 Paid for expenses; $3,500.
15 Completed services for a client and sent a bill for $1,500.
31 The owner withdrew $250 cash for personal use.
Required
1. Create a General Ledger by setting up the following accounts: Cash, 101; Accounts Receivable, 106; Equipment, 150; Accounts Payable, 201; Mira Delco, Capital, 301; Mira Delco, Withdrawals, 302; Revenue, 401; Expenses, 501.
2. Journalize the July transactions in the General Journal.
3. Post the July transactions from your General Journal into your General Ledger accounts.
4. Prepare a trial balance based on the balances in your General Ledger accounts.
5. Prepare an income statement, statement of changes in equity, and balance sheet based on your trial balance.
Analysis Component: Assets are financed by debt and equity transactions, a concept reinforced by the accounting equation: A = L + E. Since accounts receivable are an asset, are they financed by debt and/or equity? Explain.