Question

Fred Jones started The Jones Company ("Company"), a new business that began operations on May 1. TJC completed the following transactions during its first month of operations:

May 1 Fred Jones invested $60,000 cash in the Company.

1 The Company rented a furnished office and paid $3,000 for May's rent.

3 The Company purchased $1,500 in office equipment on credit.

5 The Company paid $500 cash for May's cleaning services.

8 The Company performed consulting services for a client and immediately collected $8,000 in cash.

12 The Company performed $3,000 in consulting services for a client and immediately billed them.

15 The Company paid $1,000 for an assistant's salary for the first half of May.

20 The Company received $3,000 cash payment for the services rendered on May 12.

22 The Company performed $2,500 in consulting services for a client and immediately billed them.

25 The Company received $2,500 cash payment for the services rendered on May 22.

26 The Company paid 1,500 for the office equipment purchased on May 3.

27 The Company purchased $1,000 in office equipment on credit.

28 The Company paid $1,000 for an assistant's salary for the second half of May.

30 The Company paid $500 cash for the May telephone bill.

30 The Company paid $750 cash for the May utility bill.

31 Fred Jones withdrew 1,200 cash from the Company for personal use.

Required: 1 Record the appropriate journal entries 2 Complete the table on the "Accounting Equation Tab (AE)". Do not determine new balances after each transaction - rather just final balances. Make sure "Check" is in balance 3 Prepare the following financial statement: Income Statement (IS). Headings on your financial statements are important

Answer 1

Ans. 1. Journal Entries

Date	General Journal	Debit	Credit
May 1	Cash/Bank Account	$60000
	Capital/Security Account		$60000
May 1	Rent Account	$3000
	Cash/Bank Account		$3000
May 3	Office Equipment Account	$1500
	Creditor Account		$1500
May 5	Cleaning Service Expense Account	$500
	Cash/Bank Account		$500
May 8	Cash/Bank Account	$8000
	Consultancy Service Account		$8000
May 12	Debtor Account	$3000
	Consultancy Service Account		$3000
May 15	Salary Account	$1000
	Cash/Bank Account		$1000
May 20	Cash/Bank Account	$3000
	Debtors Account		$3000
May 22	Debtors Account	$2500
	Consultancy Service Account		$2500
May 25	Cash/Bank Account	$2500
	Debtors Account		$2500
May 26	Creditor Account	$1500
	Cash/Bank Account		$1500
May 27	Office Equipment Account	$1000
	Cash/Bank Account		$1000
May 28	Salary Account	$1000
	Cash/Bank Account		$1000
May 30	Telephone Expense Account	$500
	Cash/Bank Account		$500
May 30	Utility Expense Account	$750
	Cash/Bank Account		$750
May 31	Drawing Account	$1200
	Cash/Bank Account		$1200

Cash Account

Date	Receipt	Amount	Date	Payment	Amount
May 1	Capital Account	$60000	May 3	Rent Account	$3000
May 8	Consultancy Service	$8000	May 5	Cleaning Service Account	$500
May 20	Debtors Account	$3000	May 15	Salary Account	$1000
May 25	Debtors Account	$2500	May 26	Office Equipment	$1500
			May 28	Salary Account	$1000
			May 30	Telephone Expense A/c	$500
			May 30	Utility Expense A/c	$750
			May 31	Drawing Account	$1200
			May 31	Balance C/f	$64050
	Total	$73500		Total	$73500

Income Statement

Expense	Amount	Revenue	Amount
To Rent Account	$3000	By Consultancy Service	8000
To Cleaning Service Exp. A/c	$500	By Consultancy Service	3000
To Salary Account	$1000	By Consultancy Service	2500
To Salary Account	$1000
To Telephone Expense A/c	$500
To Utility Expense A/c	$750
To Net Profit/Retained Earning	$6750
Total	$13500	Total	$13500