Question
Problem 2 Analyzing transactions and preparing financial statements Samy Samer started a new business and completed these transactions during December. Dec. 1 Samy Samer transferred
Problem 2
Analyzing transactions and preparing financial statements
Samy Samer started a new business and completed these transactions during December.
Dec. 1 |
| Samy Samer transferred $65,000 cash from a personal savings account to a checking account in the name of Samer Electric. |
2 |
| The company rented office space and paid $1,000 cash for the December rent. |
3 |
| The company purchased $13,000 of electrical equipment by paying $4,800 cash and agreeing to pay the $8,200 balance in 30 days. |
5 |
| The company purchased office supplies by paying $800 cash. |
6 |
| The company completed electrical work and immediately collected $1,200 cash for these services. |
8 |
| The company purchased $2,530 of office equipment on credit. |
15 |
| The company completed electrical work on credit in the amount of $5,000. |
18 |
| The company purchased $350 of office supplies on credit. |
20 |
| The company paid $2,530 cash for the office equipment purchased on December 8. |
24 |
| The company billed a client $900 for electrical work completed; the balance is due in 30 days. |
28 |
| The company received $5,000 cash for the work completed on December 15. |
29 |
| The company paid the assistants salary of $1,400 cash for this month. |
30 |
| The company paid $540 cash for this months utility bill. |
31 |
| Samy Samer withdrew $950 cash from the company for personal use. |
Required
- Arrange the following asset, liability, and equity titles in a table like Exhibit 1.9: Cash; Accounts Receivable; Office Supplies; Office Equipment; Electrical Equipment; Accounts Payable; S. Samer, Capital; S. Samer, Withdrawals; Revenues; and Expenses.
- Use additions and subtractions to show the effects of each transaction on the accounts in the accounting equation. Show new balances after each transaction.
- Use the increases and decreases in the columns of the table from part 2 to prepare an income statement and a statement of owners equity each of these for the current month. Also prepare a balance sheet as of the end of the month.
Analysis Component
- Assume that the owner investment transaction on December 1 was $49,000 cash instead of $65,000 and that Samer Electric obtained another $16,000 in cash by borrowing it from a bank. Explain the effect of this change on total assets, total liabilities, and total equity.
Check (2) Ending balances: Cash, $59,180, Accounts Payable, $8,550 (3) Net income, $4,160; Total assets, $76,760
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started