Question

Lily Zhang started a new business on January 1, 2017, called Zhang Consulting. She develops financial investment plans for young adults. During the business's first year of operations, the following activities Problem 5. Calculate the ai 1-7B Analyzing transactions and preparing financial statements CHECK FIGURES: 2. Cash balance, December 31, 2017 = $43,800 3. Profit = $5.700: Total assets = $324,200 occurred: a. Zhang invested $120,000 cash and office equipment valued at $10,000 in the business. b. Purchased a small building for $240,000 to be used as an office. Paid $50,000 in cash and signed a note payable promising to pay the balance over several years. c. Purchased $18,000 of office equipment for cash. d. Purchased $4,000 of office supplies and $6,400 of office equipment on credit. e. Paid a local online newspaper $4,500 for an announcement that the office had opened. f. Completed a financial plan on credit and billed the client $6,000 for the service. g. Designed a financial plan for another client and collected an $8,000 cash fee. h. Zhang withdrew $5,500 cash from the company bank account to pay personal expenses. i. Zhang signed a $20,000 contract for the office to be painted in February 2018. A deposit of $6,000 will be paid on January 15, 2018. j. Received $4,000 from the client described in (f). k. Paid for the equipment purchased in (d). 1. Paid $3,800 cash for the administrative assistant's wages. Required 1. Create a table like the one presented in Exhibit 1.15, using the following headings for the columns: Cash; Accounts Receivable; Office Supplies; Office Equipment; Building; Accounts Payable; Notes Payable; and Lily Zhang, Capital. Leave space for an Explanation of Equity Transaction column to the right of the Capital column. Identify revenues and expenses by name in the Explanation column. 2. Use additions and subtractions to show the effects of the above transactions on the elements of the equation. Do not determine new totals for the items of the equation after each

Answer 1

M N o А B с D E F G H 1 1 and 2-ACCOUNTING EQUATION Assets Liabilities Equity A/C Office Office A/C Notes Date Cash receivable supplies equipment Building (=) Payable payable (+) Capital Explanation a 120000 10000 (E) (+) 130000 b -50000 240000 (5) 190000 (+) с - 18000 18000 E) d 4000 6400 10400 -4500 =) -4500 Advertisement expense f 6000 (=) (+) 6000 Service revenue 8000 =) 8000 Service revenue h -5500 E) -5500 Drawings (=) (+) No treatment 4000 -4000 (6) (+) k -6400 E) -6400 I (+) -3800 wages expense 5 Balance 43800 2000 4000 34400 240000) 4000 190000 (+) 130200 e -3800 14000 3. INCOME STATEMENT Revenue Service revenue 2 Operating expenses B Wages expense Advertising Total expense 5 Profit STATEMENT OF CHANGES IN EQUITY Capital, Jan1 130000 Add; Profit Less: drawings -5500 Capital, Dec 31 130200 5700 BALANCE SHEET Assets Cash Accounts receivable Office supplies Office equipment Building 3800 4500 Amount Liabilties Amount 43800 Accounts payable 4000 2000 Notes payable 190000 4000 Capital 130200 34400 240000 324200 324200 8300 5700