Question

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In February and March, W.T. began to take one new types of jobs. However, these new types of JODs also require that he purchase and use a small amount of supplies to complete them. This means that some items may be paid for in cash before they're used to produce revenue. In order to report net income that accurately matches revenues and the expenses that helped to generate them, W.T. needs to be careful about how he accounts for these items. Because W.T.'s aunt hasn't fully been repaid, she's asked that she be provided with financial statements for the current quarter (January-March) of operations. Below are summaries of transactions completed during February and March 1. Paid the social media manager the amount owed from January. 2. Collected $495 of accounts receivable from January. 3. Purchased supplies of $40. 4. Received $2,625 in exchange for completing 175 jobs, less a $131 fee due to PayPal. 5. In February and March, completed 66 jobs on account for clients with standing appointments. Each client was billed at the rate of $15 per job. 6. Collected $500 of accounts receivable for jobs completed in February 7. Purchased and used gas of $575 in order to complete jobs. 8. Paid the newspaper $240 for advertising for February and March. 9. Paid the social media manager $250. This amount represented her monthly fee and fee for 150 of the jobs scheduled during the February and March. 10. Paid friends $600 to complete 50 jobs during February and March. 11. Paid a salary of $800 to W.T. 12. Repaid W.T.'s aunt $200 of the total amount owed to her. 13. As of March 31, determined that the social media manager is owed her scheduling fee for 25 jobs scheduled and completed over the last few days of the month. 14. Determined that there are $15 of supplies on hand at March 31. For each of the above transactions, 1. Record the transactions in the appropriate general ledger accounts under an accounting equation. Record the amounts of revenue and expense in the Retained Earnings column. Provide the appropriate titles for these accounts in the last column of the table. 2. Prepare the income statement, statement of changes in stockholders' equity, and balance sheet for My Assistant, Inc. for the three months ending March 31. Determine the total amount of cash flow related to operating, investing, and financing activities for the three months ending March 31. Reconcile those amounts to the net change in cash. 3.

Answer 1

My Assistant Accounting Equation for February - March
	Assets	=	Liabilities	+	Stockholders’ Equity	Account titles for RE
Item	Cash	Accts Rec	Supplies	=	Fees Payable	Notes Payable	+	Common Stock	Retained Earnings
Bal. Feb. 1	$739	$495	$0		$16	$400		$100	$718
1.	-$16				-$16
2.	$495	-$495
3.	-$40		$40
4.	$2625 -$131								$2625 -$131	Service Revenue Operating expense
5.		$990							$990	Service Revenue
6.	$500	-$500
7.	-$575								-$575	Operating Expense (Gas)
8.	-$240								-$240	advertising expenses (F+M)
9.	-$250								-$250	smm expense
10.	-$600								-$600	salaries expense
11.	-$800								-$800	salaries expense
12.	-$200					-$200
13.					$25				-25	accrued salary
14.			-$25						-$25	supplies expense
Bal. Mar. 31	$1507	$490	$15		$25	$200		$100	$1687

My Assistant, Inc. Income Statement For the Three Months Ended March 31
Revenue	$5310
Expense	$3926
Net Income	$1384

	January	February - March	Total
Service revenue	$1,695	$3,615	$5310
Operating expenses:	$1280	$2646
Collection fee	$60	$131	191
Gas expense	280	575	855
Advertising expense	120	240	360
Scheduling expense	180	275	455
Delivery expense	240	600	840
Salaries expense	400	800	1200
Supplies expense	0	25	25
Total operating expenses	415	969	1384

My Assistant, Inc. Statement of Changes in Stockholders’ Equity For the Three Months Ended March 31
	Common Stock	Retained Earnings	Total Stockholders’ Equity
Beginning Balance	$100		$100
Plus: common stock issued	$0		$0
Plus: retained earnings		$1687	$1687
Less: dividends		$0	$0
Ending Balance			$1787

My Assistant, Inc. Balance Sheet As of March 31
ASSETS:		LIABILITIES:
cash	$1507	notes payable	$200
acct receivable	$490	fees payable	$25
supplies	$15	Total Liabilities	$225
		STOCKHOLDERS’ EQUITY:
		common stock	$100
		retained earnings	$1687
		Total Stockholders’ Equity	$1787
Total Assets	$2012	Total Liabilities & Stockholders’ Equity	$2012

My Assistant, Inc. Balance Sheet As of March 31
Assets
cash	1507
acct receivables	490
supplies	15
Total Assets		2012
Liabilities and Stockholders’ Equity
Liabilities:
fees payable	15
notes payable	200
Total Liabilities		225
Stockholders’ Equity:
common stock	100
retained earnings	1687
Total Stockholders’ Equity		$1787
Total Liabilities and Stockholders’ Equity		$2012

Item	Operating	Investing	Financing	No Cash Effect
Totals from January	$    (64)		$   (100)
1. Paid SMM	(275)
2. Collected accounts receivable	495
3. Purchase supplies	(40)
4. Complete jobs	2494
5. Complete jobs and bill clients				990
6. Collect accounts receivable	550
7. Purchase gas	(575)
8. Paid newspaper	(
9. Pay SMM
10. Pay contract labor
11. Pay W.T. salary
12. Partial loan repayment
13. Accrue amount due to SMM
14. Count supplies
Totals

Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Net change in cash
Beginning cash balance	$     903
Ending cash balance