Question

Analyzing and Reporting Financial Statement Effects of Transactions M.E. Carter launched Carter Company, a professional services firm on March 1. The firm will prepare financial statements at each month-end in March its first month. Carter executed the following transactions. Enter the transactions through into the financial statement effects template below. Carter (owner invested in the company $100.000 cash and $20.000 in property and equipment. The company issued common stock to Carter b. The company paid 53200 cash for rent of office furnishings and facilities for March c. The company performed services for clients and immediately received $4.000 cash earned d. The company performed services for clients and sent a bill for 524.000 with payment due within 60 days. e. The company compensated an office employee with 54,800 cash as salary for March f. The company recieved $10,000 cash as partial payment on the amount owed from clients in transaction d. 3. The company paid $935 cash in dividends to Carter (owner Usenetative sions with awwers, if appropriate

i want to know how they got these numbers. thanks

is this clear ?

Answer 1

Prepare journal entries to explain the accounting equation as follows: Trn. Credit Account Title Cash Equipment Common stock Debit $100.000 $20,000 $120.000 $3,200 Rent expense Cash $3,200 $4.000 Cash Service revenue $4.000 $24.000 Accounts receivable Service revenue $24.000 $4.800 Wages expense Cash $4,800 $10,000 Cash Accounts receivable $10.000 $935 Dividend Cash $935

Explanation to the above transaction that affects Accounting equation: Issuance of common stock will increase capital and cash infuse in the business will increase current asset and equipment (noncurrent asset) bring in the business also increase asset portion. Rent is an expense in nature and it will impact capital and income statement and paid in cash will decrease cash balance. Revenue received in cash will increase cash balance and also increase capital. Service performed in the nature of revenue in the income statement. When service performed but amount not received then Accounts receivable i.e. current asset will increase and service revenue credited will also increase capital and income statement. e) Wage is an expense in nature and it will impact capital and income statement and paid in cash will decrease cash balance.

When the amount received from Accounts receivable will increase cash amount and decrease Noncash assets because of the amount received from them. The dividend payment will decrease capital balance and in cash, mode will decrease cash balance as well. Please feel free to ask any query regarding the solution. Kindly rate if you like.