Question

$324,200 Lily Zhang started a new business on January 1, 2020, called Zhang Consulting. She develops financial invest 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 2. Use additions and subtractions to show the effects of the above transactions on the elements of the equ tion. Do not determine new totals for the items of the equation after each transaction. Next Problem 1-8B Analyzing CHECK FIGURES: 2. Cash balance, December 31, 2020 = $43,800; 3. Profit = $5,700; Total assets = ment plans for young adults. During the business's first year of operations, the following activities 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 ne 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 exurbses. i. Zhang signed a $20,000 contract for the office to be painted in February 2021. A deposit of $6,000 will be paid on January 15, 2021. j. Received $4,000 from the client described in (t). k. Paid for the equipment purchased in (d). Required 1. Paid $3,800 cash for the administrative assistant's wages. Capital column. Identify revenues and expenses by name in the Explanation column. 70

Answer 1

Requirement 1 & 2:

+ + Assets + Accounts + Office Receivable Supplies Office + Building Equipment Liabilities Accounts + Payable Notes Payable Equity + Lily Zhang, Capital Explanation of Equity Transaction Cash (a) +$120,000 + $10,000 +$130,000 Investment by owner (b) - 50,000 +$240,000 +$190,000 (c) 18,000 + 18,000 (d) +$4,000 + 6,400 +$10,400 (e) 4,500 4,500 (f) +$6,000 + 6,000 Advertising Expense Consulting Services Revenue Consulting Services Revenue (9) + 8,000 + 8,000 (h) 5,500 5,500 Withdrawal by owner (0)* 0) + 4,000 - 4,000 (k) - 6,400 - 6,400 (0) Bal. 3,800 $43,800 + $2,000+ $4,000 + 3,800 $4,000 + $190,000+ $130,200 Wages Expense $34,400 + $240,000 = $324,200 $324,200

For (i), since no exchange has occurred, no entry is required.