Question

Problem 3-2A a-b (Part Level Submission) On July 31, 2018, the general ledger of Pharoah Inc. showed these balances: Cash $3,990; Accounts Receivable $1,500; Supplies $530; Equipment $4,980; Accounts Payable $4,100; Common Shares $3,500; and Ret Earnings $3,400. During August, the following transactions occurred: Aug. 2 Collected $1,190 of accounts receivable due from customers. 3 Received $1,330 for issuing common shares to new investors. 6 Paid $2,670 on accounts payable owing. 7 Earned fees of $6,500, of which $2,970 was collected in cash and the remainder was due on account. 13 Purchased additional equipment for $1,190, paying $360 in cash and the balance on account. 17 Paid salaries, $3,530, rent, $900, and advertising expenses, $275, for the month of August. 17 Collected the balance of the fees earned on August 7. 20 Declared and paid $500 of dividends to shareholders. 22 Billed a client $1,000 for legal services provided. 24 Received $2,000 from Laurentian Bank; the money was borrowed on a bank loan payable that is due in six months. 27 Signed an engagement letter to provide legal services to a client in September for $4,520. 28 Received the utility bill for the month of August in the amount of $275; it is due September 15. 31 Paid income tax for the month, $500.

Answer 1

Pharoah Inc. + + + + + + + + + + + + + -2670 + + + + + + + + + + + + + + + + + + + + + Accounting Equation For the period ending 31.7.2018 Stockholders Equity Assets Liabilities Retained Earnings Date Cash + Accounts Receivable + Supplies + Equipment = Bank Loan Payable + Accounts Payable + Common Shares + Opening RE + Revenues - Expenses - Dividends declared Balances 3990 + 1500 530 + 4980 4100 3500 + 3400 2.8.2018 1190 -1190 3.8.2018 1330 1330 6.8.2018 -2670 7.8.2018 2970 3530 6500 13.8.2018 -360 1190 830 17.8.2018 - 3530 3530 -900 900 -275 275 17.8.2018 3530 -3530 20.8.2018 -500 500 22.8.2018 1000 1000 24.8.2018 2000 2000 27.8.2018 28.8.2018 275 275 31.8.2018 -500 500 Totals 6275 1310 530 2000 2535 _+_ 4830 3400 + 7500 - 5480 500 14285 14285 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + 6170 +

7500 Income Statement For the period ending 31.7.2018 Service Revenue Less: Salary Expense 3530 Rent Expense 900 Advertising Expense 275 Utility Expense 275 4980 2520 -500 2020 Income Tax Expense Net Income Statement of Retained Earnings For the period ending 31.7.2018 Beginning Balance 3400 Net Income 2020 5420 Dividends -500 4920

Amounts in $ Amounts in $ Balance sheet As at 31.1.2021 Assets Current Assets Cash Accounts Receivable Supplies Amounts in $ Amounts in $ Liabilities Current Liabilities 6275 Accounts Payable 1310 Bank Loan Payable 530 8115 2535 2000 4535 Non Current Assets Equipment Shareholders Equity 6170 Common Shares Retained Earnings 14285 Total Liabilities & Equity 4830 4920 9750 14285 Total Assets

Statement of Changes in Equity For the period ending 31.7.2018 Common Retained Stock Earnings Total Beginning 3500 3400 6900 Add:Capital 1330 1330 Net Income 2020 2020 Less:Dividends -500 -500 Ending Balance 6850 29009750