DEMONSTRATION PROBLEM:

After several months of planning, Sylvia Workman started a haircutting business called Expressions. The following events occurred during its first month:

On August 1, Workman invested $3,000 cash and $15,000 of equipment into Expressions in exchange for common stock.

On August 2, Expressions paid $600 cash for furniture for the shop.

On August 3, Expressions paid $500 cash to rent space in a strip mall for August.

On August 4, it purchased equipment for the shop on credit for $1,200 (using a long-term note payable.)

On August 5, Expressions opened for business. Cash received from services provided in the first week and a half of business (ended August 15) is $825.

On August 15, it provided haircutting services on account for $100.

On August 17, it received a $100 check for services previously rendered on account.

On August 17, it paid $125 to an assistant for working during the grand opening.

Cash received from services provided during the second half of August is $930.

On August 31, it paid a $400 installment toward principal on the note payable entered into on August 4.

On August 31, it paid $900 cash dividends to Workman.

REQUIRED:

Arrange the following asset, liability, and equity titles in a table with the subheadings: Cash, A/R, Furniture, Store Eqpmt, N/P, Common Stock, and Retained Earnings. Show the effects of each transaction using the accounting equation. Add explanations for each of the changes in equity.

Prepare general journal entries for the transactions in part 1.

Open the following ledger accounts in balance column format with the related A/C #?s: Cash (101); A/R (102); Furniture (161); Store Eqpmt (165); N/P (240); Common Stock (307); Retained Earnings (318); Haircutting Services Revenue (403); Wages Expense (623); and Rent Expense (640).

Post the journal entries from (2) to the ledger accounts created in part (3).

Prepare a trial balance as of August 31.

Prepare an unadjusted income statement for August.

Prepare an unadjusted statement of retained earnings for August.

Prepare an unadjusted balance sheet as of August 31.

Prepare an unadjusted statement of cash flows for August.

Extended Analysis:

In the coming months, Expressions will experience an ever greater variety of business transactions. Identify which accounts are debited and which are credited for the following transactions. (Hint: You may have to use some accounts not listed in part 3)

Purchase supplies with cash

Pay cash for future insurance coverage

Receive cash for services to be provided in the future

Purchase supplies on account

DEMONSTRATION PROBLEM: After several months of planning, Sylvia Workman started a haircutting business called Expressions. The following events occurred during its first month: a. On August 1, Workman invested $3,000 cash and $15,000 of equipment into Expressions in exchange for common stock. b. On August 2, Expressions paid $600 cash for furniture for the shop. c. On August 3, Expressions paid $500 cash to rent space in a strip mall for August. d. On August 4, it purchased equipment for the shop on credit for $1,200 (using a long-term note payable.) e. On August 5, Expressions opened for business. Cash received from services provided in the first week and a half of business (ended August 15) is $825. f. On August 15, it provided haircutting services on account for $100. g. On August 17, it received a $100 check for services previously rendered on account. h. On August 17, it paid $125 to an assistant for working during the grand opening. i. Cash received from services provided during the second half of August is $930. j. On August 31, it paid a $400 installment toward principal on the note payable entered into on August 4. k. On August 31, it paid $900 cash dividends to Workman. REQUIRED: 1. Arrange the following asset, liability, and equity titles in a table with the subheadings: Cash, A/R, Furniture, Store Eqpmt, N/P, Common Stock, and Retained Earnings. Show the effects of each transaction using the accounting equation. Add explanations for each of the changes in equity. 2. Prepare general journal entries for the transactions in part 1. 3. Open the following ledger accounts in balance column format with the related A/C #'s: Cash (101); A/R (102); Furniture (161); Store Eqpmt (165); N/P (240); Common Stock (307); Retained Earnings (318); Haircutting Services Revenue (403); Wages Expense (623); and Rent Expense (640). 4. Post the journal entries from (2) to the ledger accounts created in part (3). 5. Prepare a trial balance as of August 31. 6. Prepare an unadjusted income statement for August. 7. Prepare an unadjusted statement of retained earnings for August. 8. Prepare an unadjusted balance sheet as of August 31. 9. Prepare an unadjusted statement of cash flows for August. Extended Analysis: In the coming months, Expressions will experience an ever greater variety of business transactions. Identify which accounts are debited and which are credited for the following transactions. (Hint: You may have to use some accounts not listed in part 3) a. Purchase supplies with cash b. Pay cash for future insurance coverage c. Receive cash for services to be provided in the future d. Purchase supplies on account