Case 12: Ricky Rock Wresting for Fun Richard Brandt graduated from York University with his BAS although he spent more time in the gym than in the classrooms and libraries. His parents and grandparents were very proud and happy of this achievement As a graduation gift. Richard's Grandparents gave him $20,000 to start his own business So, on September 1, 2015, Richard started a small business called "Ricky Rock Wresting for Fun Ricky Rock offers a party package designed for active kids, teen and adults that want to learn and practice wresting activities for fun by learning how to perform headlocks, leg scissors and other tricks As a student, he learned and practiced Greco Roman wresting and built an impressive body Now graduated from university he has decided to continue with his passion of wrestling but added a spin to make money. In one tournament in 2013 Richard meet Linda who was competing for a US university team and she mentioned that she was working on girls birthday parties focused on wresting. In June 2015 Richard contacted Unda and told her about his idea and Linda shared with him all documentation she has prepared in these years including: brochure to be distributed to potential customers, personal cards, party themes, parties activities, schedules and agendas, etc. During August Richard has completed his business plan and was ready to launch Ricky Rock Wresting for Fun in the GTA The following is a list of transactions that occurred during the first month of operations September 16 Opened a business bank account with the $20.000 received as a gift from the Grandparents $20,000 September th signed t2 month commercial insurance contract for any liability that might emerge from the activity. 5600 per month for year September and Purchase in cash costumes of famous wrestlers to wear at parties. The costumes can last one full year 5600 September 3rd Paid in cash the set up of the website expects to last the whole te of this business $2.000, September al Collected the brochures and presentation Cards to be used in promoting the business. One third is paid in cash while the rest will be paid on October 5th $450 September 5th first event organized and delivered Briday party for a 5 years old boy. Received the payment in each $1000. September 6th Second event organized and delivered as part of a series of activities organised by a charity to raise funds. One third is paid in cash while the rest will be paid by the Charity Organization on October 5th 32.000 September of Labour day, no events, no work so Richard goes to the gym and does a double routine the rest of the days he just does a simple routine of 2.5 hours) September 12th Third event organized and delivered. Brnday party for a 7 years old boy. Parents promise to pay in a few days $1000 September 15th Pays first 2 months of insurance $1200 September 19th & 20th Fourth event organized and delivered. Prowted one of the activities of a corporate team building extravaganza weekend. The contract signed says the payment will be effective in 30 days with a cheque $2.000. September 23rd paid the gym membership for September October, November and December 2.000 September 24th Telephone bill for $200 was received for the month of September, payment due October 5th $200 September 26th Fith event organized and delivered. Birthday party for a 4 years old boy. Received payment in cash $1.000. September 26th one of the parents at the birthday party for a 4 years old boy hires him for his son's birthday party on October 10th Received payment in cash $500. September 27th Swth event organized and delivered. Birthday party for 6 years old boy. Received payment in cash $1000, September 291 Received the payment for the birthday party for the 7 years old boy of September 12th $1000 September 30 Richard pays to his parents arent for using the car for business purposes and to go and come back from the gym $200 September 30th richard promised to pay on October 6th to his parents the extra charge that comes in the insurance premium of their cars for having him as an additional driver (malo under 25) 5800 Additional formation: September 30th vertory of brochures and cards showed that two turds of them are still available not used $300 nepare te Accounts IACORTAL and CASH basis for this me using a folowns chart of accounts, when relevant prepare the income statement Statement of Retained Earnings and Balance Sheet and the answer the questions ACCRUAL accounting! Revenues Telephone Expense Car Rent Expenses Car Rent Insurance Expense Costumes Expense Brochures Expense Gys Membership Expense Insurance Expense Advances From Customers Owner's Equity Cash Brochures Accounts Receivables Prepaid Insurance Prepaid Gyn Membership Costumes Accumulated Depreciation Costumes Web Site intangible asset) Accounts Payable Costumes Depreciation Expense Telephone Payable CASH accounting: Revenue Car rent expenses Car Rent Insurance Expense Costumes Expense Telephone Expense Owner's equity Advances From Customers Expense on Web site Insurance Expense Gym Membership Expense Brochures Expense Cash Costumes Depreciation Expense Accounts Payable At the end of the accounting period (Sep 30th, T account after AJE but before preparing the Income Statement), what is the balance of Owner's equity? Use accrual accounting Multiple Choice $11000 $0 $19,500 None of the other ternatives we correct $20000