Question

Abdullah and Careem investors opened Campus Carpet Cleaning, Company. on September 1, 2012. During the first month of operations, the following transactions occurred. Sept. 1 Stockholders invested $20,000 cash in the business. 2 Paid $1,000 cash for store rent for the month of September. 3 Purchased industrial carpet-cleaning equipment for $25,000, paying $10,000 in cash and signing a $15,000 note payable. Received bill from the Daily News for advertising the opening of the cleaning service, $200 10 15 Performed services on account for $6,200. 20 Paid a $ 700 cash dividend to stockholders. 30 Received $5,000 from customers billed on September 15. Instructions: A) Prepare tabular analyses. B) Prepare Income statement. C) Prepare retained earnings statement D) Prepare balance sheet.

Answer 1

A) Tabular Analysis
Sr. No	Date	Particular	Analysis	Entry	Debit	Credit
1	01. 09.2012	Shareholder invested $20000 cash in business	Cash is an asset which will come in and will be debited	Cash A/c Dr	20000
			Sharecapital will increase which is source of internal financing and will be credited	To Share Capital		20000
2	02. 09.2012	Paid $1000 cash for store rent for September	Rent is an expense which will debit in Profit and loss A/c	Rent Expense A/c Dr	1000
			Cash is an asset which will goes out and will be credited	To Cash A/c		1000
3	03. 09.2012	Purchased industrial cleaning enquipment for $25000	Industrial Cleaning Enquipment will be fixed asset and will be debited	Cleaning Enquipment A/c Dr	25000
		Paying $10000 in cash and signing $15000 for	Cash is an asset which will goes out and will be credited	To Cash A/c		10000
		Note payable	Note Payable is current liability , which will be credited	To Note Payable A/c		15000
4	10.09.2012	Received bill from daily news for advertisement	Advertisement is an expense and will be debited in Profit and loss A/c	Advertisement Expense A/c Dr	200
		Services $200	Only bill has been received and amount has not been paid so liability will be credited	To Expense Payable A/c		200
5	15.09.2012	Performed Services on Account for $6200	Services has been performed so income amount will be credited	Customer A/c Dr	6200
			Amount has not been received yet so customer a/c as an asset will be created	To Income A/c		6200
6	20.09.2012	paid $700 cash dividend to stockholders	dividend has been paid so retained earning will be debited	Retained Earning A/c Dr	700
			cash has been paid so it will be credited	To Cash A/c		700
7	30.09.2012	Received $5000 from cutomer billed on 15 Sep	Cash has been received so it will be debited	Cash A/c Dr	5000
			Customer has paid so the asset will be reduced and will be credied	To Customer A/c		5000

B) Income Statement
Particulars	Amount
Revenue from Operations	6200
Total (A)	6200
Expenses
Rent Expenses	1000
Advertisement Expenses	200
Total (B)	1200
Net Profit (A-B)	5000

C) Retained Earning Statement
Particular	Share Capital	Retained Earning	Total
Opening Balance	0	0	0
Share Subscribed	20000	0	20000
Profit during the year	0	5000	5000
Dividend paid	0	-700	-700
Closing Balance	20000	4300	24300

D) Balance Sheet
Particulars	Amount
Asets
Fixed Asset
Cleaning Enquipment	25000
Current Assets
Receivable from customer	1200
Cash	13300
Total (A)	39500
Equity and Liability
Share Capital	20000
Retained Earning	4300
Current Liability
Note Payable	15000
Expense Payable	200
Total (A)	39500