78 chapter 1 Continuing Problem Problem P1-54 is the first problem in a sequence that begins an accounting cycle. The cycle is continued in Chapter 2 and completed in Chapter 5 P1-54 Using the accounting equation for transaction analysis, preparing financi statements, and calculating Davis Consulting began operations and completed the folllowing during December, 2014: 3. Ending Capital $18,400 return on assets (ROA) transactions Owner contributed $18.000 cash in exchange for capital. Dec. 2 Paid monthly office rent, $550. Paid cash for a computer, service for five years 00. This equipment is expected to remain in 4 Purchased office furniture on account, $4.200, The furniture should last for five years Purchased office supplies on account, $900. 5 Performed consulting service for a cient on account, $1,500. Paid utilities expenses, $250. 12 Performed service for a cient and received cash of $1,100 18 Received $1,400 in advance for client service to be performed over the next 30 days. (This increases the Unearned Revenue account which is a liability. This account will be explained in more detail in Chapter 2.) 21 Hired an administrative assistant to be paid $2,055 on the 20th day of each month. The secretary begins work immediately 21 Paid $400 on account. 26 28 Collected $300 on account Davis withdrew $1,400 30 Requirements 1. Analyze the effects of Davis Consulting's transactions on the accounting equation. Use the format of Exhibit 1-4, and include these headings: Cash; Accounts Receivable; Office Supplies; Equipment; Furniture; Accounts Payable; Unearned Revenue; Davis, Capital; Davis, Withdrawals; Service Revenue; Rent Expense; and Utilities Expense. 2. Prepare the income statement of Davis Consulting for the month ended December 31,, 2014. 3. Prepare the statement of owner's equity for the month ended December 31, 2014. 4. Prepare the balance sheet as of December 31, 2014. 5. Calculate the return on assets for Davis Consulting, n