Question

1 Problem 1-7B Analyzing transactions and preparing financial statements Nihal Naser launched a new business, Naser's Maintenance Co., that began operations on June 1. The following transactions were completed by the company during that first month. June Nihal Naser invested 5130,000 cash in the company 2 The company rented a furnished office and paid $6,000 cash for June's sont 4 The company purchased $2,400 of equipment on credit. 6 The company paid $1,150 cash for this month's advertising of the opening of the business. 8 The company completed maintenance services for a customer and immediately collected $850 cash 14 The company completed $7.500 of maintenance services for Sun City Mall credit 16 The company paid $800 cash for an assistant's salary for the first half of the month 20 The company received $7,500 cash payment for services completed for Sun City Mall on June 14. page 44 21 The company completed $7.900 of maintenance services for Woooh Beauty Shop on credit 24 The company completed $675 of maintenance services for Built Coop ce credit 25 The company received $7.900 cash payment from Wojoch Beauty Shop for the work completed on June 21. 26 The company made payment of S2.400 cash for equipment purchased on June 4 28 The company paid $800 cash for an assistant's salary for the second half of this month 29 Nihal Naser withdrew $4,000 cash from The company for personal use. 30 The company paid $150 cash for this month's telephone ball 30 The company puid 8890 cash for this month's utilities Required 1. Arrange the following asset, liability, and equity titles in a table like Exhibit 1.9: Cash; Accounts Receivable; Equipment; Accounts Payable; N. Naser, Capital; N. Naser, Withdrawals; Revenues; and Expenses. 2. Show the effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns. Do not determine new account balances after each transaction. Determine the final total for each account and verify that the equation is in balance. 3. Prepare a June income statement, a June statement of owner's equity, a June 30 balance sheet, and a June statement of cash flows. Check (2) Ending balances: Cash, $130.060: Expenses, $9,790 (3) Net income, $7,135; Total assets, $133,135

Answer 1

II Income Stmt heads Owners Equity N. Naser, withdrawals + Revenues + Expenses + (6,000) Rent expense + + + + + 850 + + (1,150) Advertising expense Service Revenue Service Revenue (800) Salaries expense + Naser's Maintenance Co. Assets Liabilties + Accounts = Accounts + N. Naser, No. Cash Receivable Equipment = Payable + Capital 1-Jun 130,000 + 130,000 2-Jun (6,000) + 4-Jun 2,400 = 2,400 + 6-Jun (1,150) 8-Jun 850 14-Jun 7,500 + 16-Jun (800) + 20-Jun 7,500 (7,500) 21-Jun 7,900 24-Jun 675 + 25-Jun 7,900 (7,900) + 26-Jun (2,400) (2,400) + 28-Jun (800) + 29-Jun (4,000) + 30-Jun (150) 30-Jun (890) Totals 130,060 675 2,400 + 130,000 7,500 11 11 11 + + + + II + - + 7,900 675 Service Revenue Service Revenue + + I! + - + (800) Salaries expense (4,000) + + + + + (150) Telephone expense (890) Utilities expense (9,790) (4,000) + 16,925

Calculation 16,925 Naser's Maintenance Co. Income Statement For the Month Ended June 30 Revenues Service Revenue Expenses Rent expense Salaries expense Advertising expense Utilities expense Telephone expense Total Expenses Net Income 800+800 + 6,000 1,600 1,150 890 150 9,790 7,135 Statement of Owners Equity For the Month Ended June 30 Capital, June 1 Add: Investments Add: Net Income 130,000 7,135 137,135 (4,000) 133,135 Less: Withdrawals Capital, June 30

Naser's Maintenance Co. Balance Sheet As of June 30 Assets Current Assets Cash Accounts Receivable Total Current Assets 130,060 675 130,735 Property, Plant & Equipment Equipment Total Assets 2,400 133,135 Liabilities & Owners Equity Current Liabilities Accounts Payable Owners Equity Capital Total Liabilities & Owners Equity 133,135 133,135

Calculation 850 15,400 7500+7900 16,250 Naser's Maintenance Co. Cashflow Statement For the Month Ended June 30 Cash flows from Operating Activities Cash receipts Cash received from cash sales Cash received from credit sales Total cash receipts Cash payments Cash paid for Rent Cash paid for Salaries Cash paid for Advertising Cash paid for Telephone Cash paid for Utilities Total cash payments Net Cash Provided/(Used) by Operating Activities 800+800 (6,000) (1,600) (1,150) (890) (150) (9,790) 6,460 Cash flows from Investing Activities Purchase of equipment Net Cash Provided/(Used) by Investing Activities (2,400) (2,400) 130,000 (4,000) Cash flows from Financing Activities Cash received from investments Withdrawals made Net Cash Provided/(Used) by Financing Activities Net Change in Cash Cash at Beginning of Period Cash at End of Period 126,000 130,060 130,060

Cashflows Indirect

Naser's Maintenance Co. Cashflow Statement For the Month Ended June 30 Cash flows from Operating Activities Net income 7,135 Adjustments to reconcile net income to net cash from operating activities Increase in Accounts Receivable (675) Increase in Accounts Payable Net Cash Provided/(Used) by Operating Activities 6,460 Cash flows from Investing Activities Purchase of equipment Net Cash Provided/(Used) by Investing Activities (2,400) (2,400) 130,000 (4,000) Cash flows from Financing Activities Cash received from investments Withdrawals made Net Cash Provided/(Used) by Financing Activities Net Change in Cash Cash at Beginning of Period Cash at End of Period 126,000 130,060 130,060