Jennifer White recently formed Southwest Land Design to fill a need for designing, installing and maintaining natural, desert oriented residential landscaping. In January of this year, its first month of operations, the following transactions occurred.

1. White invests $200,000 of her own money into the company. 2. Purchased an office building for $150,000 in cash. The building is valued at $110,000, and the remainder of the value is assigned to the land.

3. Signed a three-year promissory note at the bank for $125,000.

4. Purchased office equipment at a cost of $50,000, paying $10,000 down and agreeing to pay the remainder in 10 days.

5. Paid wages and salaries of $13,000 for the first half of the month. Office employees are paid twice per month.

6. Paid the balance on the office equipment from transaction #4.

7. Sold $54,000 of advertising during the first month. Customers have until the 15th of the following month to pay their bills.

8. Paid wages and salaries of $15,000 for the second half of the month.

9. Recorded $3,500 in commissions earned by the sales people during the month. They will be paid on the fifth of the following month.

10. White draws $10,000 from the company as her salary for the month.

Complete the accounting equation worksheet for transactions 1-10.

Total the worksheet and verify that Assets = Liabilities + Equity.

AND

In proper order and form, prepare an income statement, statement of owners equity

and balance sheet.

Southwest Land Design

Transactions for January

ASSETS

LIABILITIES

EQUITY

Accounts

Office

Accounts

Commissions

Notes

#

Cash

Receivable

Land

Equipment

Building

=

Payable

Payable

Payable

+

Amount

Description

1.

=

+

2.

=

+

3.

=

+

4.

=

+

5.

=

+

6.

=

+

7.

=

+

8.

=

+

9.

=

+

10.

=

+

Totals

=

+