Problem 1-8A Analyzing transactions and preparing financial statements L06, 7, 8 George Littlechild started a new kitchen and bath design business called Littlechild Enterprises. The following activities occurred during its first month of operations, March 2020: a. Littlechild invested $175,000 cash and office equipment valued at $23,000 in the business. b. Purchased a small building for $630,000 to be used as an office. Paid $115,000 in cash and signed a note payable promising to pay the balance over several years. c. Purchased $3,300 of office supplies for cash. d. Purchased $75,000 of office equipment on credit. e. Littlechild made reservations at a hotel hosting a kitchen and bath design conference in August 2020. He will send a $1,300 deposit on July 1, 2020, f. Completed a project on credit and billed the client $5,500 for the work. 9. Paid a local online newspaper $3,800 for an announcement that the office had opened. h. Completed a project for a client and collected $4,300 cash. I. Made a $4,300 payment on the equipment purchased in (d). j. Received $2,650 from the client described in (f). k. Pald $7,600 cash for the office secretary's wages. I. Littlechild withdrew $3,900 cash from the company bank account to pay personal living expenses. Required: 1. & 2. Complete the following table. Use additions and subtractions to show the transactions effects on the elements of the equation. For each change in equity, select whether the change was caused by an investment, a revenue, an expense, or a withdrawal. Determine the final total for each item and verify that the equation is in balance. (Enter all amounts as positive values. If the transaction/event does not affect equity or do not require a journal entry, select "No Affect on Equity" in the 'Explanation of equity transaction' field.) Assets Office Supplies Cash Accounts Receivable Liabilities Accounts Payable + + + Office Equipment $ 23,000 Building Notes Payable Equity Littlechild Explanation of Equity Capital Transaction S x Investment by 198,000 Owner Investment by > owner Wages expense X 630,000 > (a) $175,000 (b) (115,000 (c) (3,300 $ (d) (e) 3,300 x 75,000 X 75,000 No Affect on Equity 5,500 Service revenue (0) 5,500 x XXOOOOX (9) X 3,800 x 3,800 Advertising 4,300 Service expense x revenue X (4,300X (h) (i) (0) (k) ) 4,300 x (4,300 x 2,650 (7,600 > (3,900 X x ( (2,650 X x (7,600 Wages (3,9001 Withdrawal by expense owner (1) $ Bal. $ 51,650X + $ 2,850+ $ 3,300+ $ 98,000 + $ 630,000 = $ 70,700+ 270,800+ $ 200,100 % IS 785,800 *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. IS 541,600 ed ed 3-a. Prepare an income statement. k t Littlechild Enterprises Income Statement For Month Ended March 31, 2020 Revenues Service revenue S 9,800 Operating expenses: $ Wages expense Advertising expense 3,800 Total operating 11,400 expenses S Loss (1,600 7,600 nce 3-b. Prepare a statement of changes in equity. Littlechild Enterprises Statement of Changes in Equity For Month Ended March 31, 2020 George Littlechild, capital, S March 1 Add: Investments by 198,000 owner S Total 198,000 Less: Withdrawals by owner $ 3,900 Loss 1,600 5,500 George Littlechild, capital, $ Marah 21 1109 and erence 3-b. Prepare a statement of changes in equity. Littlechild Enterprises Statement of Changes in Equity For Month Ended March 31, 2020 George Littlechild, capital, March 1 $ Add: Investments by owner 198,000 $ Total 198,000 Less: Withdrawals by owner S 3,900 Loss 1,60075,500 George Littlechild, capital, $ Tiarrh 21 11025 3-c. Prepare a balance sheet. Littlechild Enterprises Balance Sheet March 31, 2020 Assets Liabilities Cash $ 51,650X Accounts payable $70.700 Accounts receivable 2,850Notes payable 270,800 X Office supplies $ 3,300 Total liabilities 341,500 Office equipment 98,000 Equity $ Building 630,000 George Littlechild capital Total assets $ Total liabilities and $ 785,800 equity 541,600 *Red text indicates no response was expected in a cell or a formula-based 200,100% Analysis Component: Littlechild Enterprises' assets are financed 75% by debt. What does this mean? As part of your answer, include an explanation of how the 75% was calculated. (Round your answer to the nearest whole number.) s Assets result from a combination of debt and equity financing (A = L +E). Littlechild Enterprises' total assets of resulted from in x 100 $ 341,500 $541,600% incurring . 541.600 $ 341,500% liabilities 75 % =