Question

Please use Excel to complete the following use case:

John Jacobs lost his job as a carpenter with a contractor when a recession hit the construction industry. Jacobs had been making USD 50,000 per year. He decided to form his own company, JacobsCorporation, and do home repairs.

The following is a summary of the transactions of the business during the first three months of operations in 2019:

Jan.15 Stockholders invested USD 40,000 in the business.

Feb.25 Received payment of USD 4,400 for remodeling a basement into a recreation room. The homeowner purchased all of the building materials.

Mar.5 Paid cash for an advertisement that appeared in the local newspaper, USD 150.

Apr.10 Received USD 7,000 for converting a room over a garage into an office for a college professor. Theprofessor purchased all of the materials for the job.

Apr.11 Paid gas and oil expenses for automobile, USD 900.

Apr.12 Miscellaneous business expenses were paid, USD 450.

Apr.15 Paid dividends of USD 2,000.

a. Prepare journal entries for these transactions.

b. Post the journal entries to T-accounts.

c. How profitable is this new venture? Should Jacobs stay in this business?

Presentation:

Excel Sheet 1 = Journal Entries

Excel Sheet 2 = T-accounts

Excel Sheet 3 = Answers to the questions

Answer 1

Debit(USD) Credit(USD) 40000 40000 4400 44001 Journal Entries Date Particulars of Business Transactions JAN.15 Cash A/CDR TO Capital A/C (Being Amount Invested) FEB.25 Cash A/C DR TO Sales A/C (Being Amount received for sale of services) MAR.5 Advertisement A/C DR TO CASH A/C (Being Amount Paid for Advertisement Expenses) APR.10 Cash A/CDR TO Sales A/C (Being Amount received for sale of services) APR.11 Gas and Oil Expense A/C DR TO CASH A/C (Being Amount Paid for Gas and Oil) APR.12 Miscellaneous Expense A/C DR TO CASH A/C Being Amount Paid for Miscellaneous Expenses) APR.15 Divideds Paid A/C DR TO CASH A/C (Being Dividend Paid) 7000 7000 900 900 450 450 2000 2000

Dr CAPITAL AIC Date. Particulars...Amount(USD). ...Date Particulars To Balance Cld 40000 JAN.15 By Cash A/C Advertisement AIC Amount(USD) Amount(USD) 40000 Date Particulars MAR.5 TO CASH AIC .... Date. Particulars...Amount(USD). By Balance Cld 150 40000 150 40000 40000 By Balance bid To Balance bld Dr СТ Or CASH AIC I Amount(USD) Gas and Oil Expense AIC Amount(USD) USD) Date Particulars APR.11 TO CASH AIC Date Particulars By Balance Cid Amount(USD) 900 Date Particulars JAN.15 To Capital A/C FEB.25 To Sales A/C APR.10 TO Sales A/C 900 Date Particulars 40000 MAR.5 By Advertisement A/C 4400 APR.11 By Gas and Oil Expense AIC 7000 APR.12 By Miscellaneous Expense A/C APR.15 ByDivideds Paid A/C By Balance Cld 51400 900 To Balance bid 2000 47900 51400 o Balance bid 47900 SALES AIC Amount(USD) Date Particulars Date Particulars FEB.25 By Cash A/C 11400 APR.10 By Cash AIC Amount(USD) Cr mount(USD) 4400 7000 Dr Miscellaneous A/C Date Particulars J Amount USU.. APR.12 TO CASH AIC Date Particulars By Balance Cid To Balance Cid 114001 To Balance bld 11400 11400 By Balance bid Dr Date Particulars APR.15 TO CASH A/C Dividend Paid AIC Amount(USD) 2000 Date.... Amount(USD 2000! 2000 2000 2000 To Balance bid

Reference Amount(USD) 11400 Profit Statement Particulars Sales Less:Expenses; Advertisement Expenses Gas and Oil Expense Miscellaneous Expenses Total Expenses Profit Before Dividend Dividend Paid Profit After Dividend 150 900 E=B+C+D FEA-E 450 1500 9900 2000 7900 HEF-G Income From Carpenter Job Per Year Income From Carpenter Job Per 3 Months J=1/4 50000 12500 New Venture is profitable Jacob Should stay in the business.But as compared to his income from carpenter job is more than business income