Question

Rhoades Tax Services began business on December 1, 2015. Its December transactions are as follows. Dec. Rhoades invested $20,000 in the business in exchange for common stock. 2 Paid $1,200 cash for December rent to Bomba Realty. 2 Purchased $1,080 of supplies on account. 3 Purchased $9,500 of office equipment; paying $4,700 cash with the balance due in 30 days. 8 Paid $1,080 cash on account for supplies purchased December 2 14 Paid $900 cash for assistant's wages for 2 weeks' work. 20 Performed consulting services for $3,000 cash 28 Paid $900 cash for assistant's wages for 2 weeks' work 30 Billed clients $7,200 for December consulting services. 31 Paid $1,800 cash for dividends. 1

Answer 1

f (1) Income statement

Consulting revenue [3000+7200+(30 hrs * $75)] = 12450

Expenses:

  Wages expense 2070

Rent expense 1200

Supplies expense 370

Depreciation expense 120

Total expenses   = 3760   

net income = $8690

(2) Statement of stockholder's equity

	Common stock	Retained earning	stockholder's equity
balance at Dec1,2015	0	0	0
stock issuance	20000	0	20000
Dividends	0	(1800)	(1800)
Net income	0	8690	8690
balance at Dec31,2015	20000	6890	26890

(3) Balance sheet

at 31 December ,2015

Assets

Cash 12420

Supplies 710

Fees receivable 9450

Office equipment 9500

less:Accumulated depreciation (120) 9380

  Total assets $31960

Liabilities

Wages payable 270

Accounts payable 4800

Total Liabilities 5070

stockholders equity

Common stock    20000

Retained earning   6890

Total stockholders equity 26890

Total Liabilities and stockholders equity $31960

g.

Date	Description	Dr	Cr
12/31
5	Consulting services	12450
	income statement		12450
	[To close the revenue account]
6	Income statement	3760
	Wages expense		2070
	Rent expense		1200
	Supplies expense		370
	Depreciation expense		120
	[To close the expense accounts]