Question

ས༤༡༥ནས༡༣ གས ན ་ནས༌ ༢༤ 1. Meg McKinney opened a public relations firm called Solid Gold on August 1, 2018. The following amounts summarize her business on August 31, 2018: ARVITS LALITHE EQUITY Cash land A nh. Oke Raphahe S ies $1,200 . 50 Accounts Payable $5,000 McKinney, - McKinney,+ Service - Rent Capital Withdrawals Revenue Expense $11.900 + $3,200 Advertising Expense Hal $1,900 315,000 During September 2018, the business completed the following transactions: a. Meg McKinney contributed $17,000 cash in exchange for capital. b. Performed service for a client and received cash of $800. C Paid off the beginning balance of accounts payable. d. Purchased office supplies from OfficeMax on account, $1,200. e. Collected cash from a customer on account, $2,000. f. McKinney withdrew $1,600. 9. Consulted for a new band and billed the client for services rendered, $4,500. h. Recorded the following business expenses for the month: I Paid office rent: $1,000. ll. Paid advertising: $500. Requirements: R1. Analyze the effects of the transactions on the accounting equation of Solid Gold using the format presented in Exhibit 1-5. R2. Prepare the income statement of Solid Gold for the month ended August 31, 2018 R3. Prepare the entity's statement of retained earnings for the month ended August 31, 2018 R4. Prepare the balance sheet at August 31, 2018.

Answer 1

1)
R1) Accounting Equation:
Serial	Assets				=	Liabilities +	Equity
	Cash +	AR +	Off. Suppl +	Land	=	Acc. Payable	McKinney Capi -	McKinney Withdr +	Service Rev. -	Rent Exp. -	Advert Exp.
Op. Balance	1900	3200		15000	=	5000	11900		3200
a	17000				=		17000
b	800				=				800
c	-5000				=	-5000
d			1200		=	1200
e	2000	-2000			=
f	-1600				=			-1600
g		4500			=				4500
h	-1500				=					-1000	-500
Cl. Balance	13600	5700	1200	15000	=	1200	28900	-1600	8500	-1000	-500
Grand Total				35500	=	35500
R2) Income Statement:
Sales	8500
Less:Expenses:
Rent	1000
Advertising	500
Tota expenses	1500
Net Income	7000
R3) Statement of retained earnings:
Net Income	7000
R4) Balance Sheet:
	Amount $
Assets:
Cash	13600
Acc. Receivable	5700
Office Supplies	1200
Current Assets	20500
Land	15000
Total Assets	35500
Liabilities & Equity:	Amount $
Acc Payable	1200
Current Liabilities	1200
Equity:
Mckinney Capital	28900
Less: Withdrawal	1600
Add:Net Income	7000
Net Equity	34300
Total Liab. & Equity	35500