At the end of her first year of university, Nola Lam decided that she should start a business to help finance her education, so she set up her own courier service. She invested savings of $2,500 in the company, which she called Wroad Wrunner Ltd. In addition, her parents lent the company $4.400 to help it get started. Since this was a business venture, Nola insisted on paying interest on this loan, and her parents agreed to charge a rate of 6% per year. Nola then negotiated the purchase of a used car for the business for $8,000. The company made a down payment of $2,700 on the car, and financed the remainder of the purchase price at an interest rate of 9% per year. Due to all of the kilometres that would be put on the car while it was used in the courier business, Nola estimated that the car could be sold at the end of the summer for $6,000. Wroad Wrunner began operations on May 1, and continued until August 31. Although she did not keep any formal accounting records, at the end of the summer Nola put together the following additional information related to the business: 1. 2. 3. During the summer, the company made payments of $689 on the car, which included interest of $159 and principal of $530. No payments (of either interest or principal) were made on the loan from her parents. Nola paid herself a salary of $1,000 per month for the four months that the business operated. Payments for other operating costs (including advertising, insurance, and gas) totalled $9,500. In addition, there were unpaid bills totalling $150 at the end of August. Courier charges collected from customers totalled $20.800. In addition, customers still owed $450 for services performed in the last two weeks of August. 4 5. 6. After the close of business on August 31, there was a balance of $10,724 in the company's bank account, plus a "float" of $87 in the car. Analyze the transactions that affected the business during the summer. (Enter amounts that decrease account balance using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Indicate whether it is Revenue or Expense in the last column, in case if there is no effect then select "Not Applicable") Assets Liabilities Trans. Cash Accounts Receivable Car Accounts Pay Investment $ $ $ $ $ $ Analyze the transactions that affected the business during the summer. (Enter amounts that decrease account balance using either a negative sign preceding the number eg. -45 or parentheses eg. (45). Indicate whether it is Revenue or Expense in the last column, in case if there is no effect then select "Not Applicable") Assets Liabilities Trans. Cash Accounts Receivable Car Accounts Pay Investment $ $ $ $ $ Par. Loan Purch. Car 1. 2. 3. 4. 5. 6. Total LA $ $ $ $ Analyze the transactions that affected the business during the summer. (Enter amounts that decrease account balance using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45). Indicate whether it is Revenue or Expense in the last column, in case if there is no effect then select "Not Applicable".) Liabilities Accounts Payable Interest Payable Note Payable (Parents) Loan Payble (Car) $ $ $ $ $ $ $ TA $ $ $ $ Analyze the transactions that affected the business during the summer. (Enter amounts that decrease account balance using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Indicate whether it is Revenue or Expense in the last column, in case if there is no effect then select "Not Applicable") Shareholders' Equity Common Shares Loan Payble (Car) Retained Earnings $ $ $
