Question

The accountant for the firm owned by Randy Guttery prepares financial statements at the end of each month. The following transactions for Randy Guttery, Landscape Consultant took place during the month ended June 30, 2019.

Transactions:

1. Guttery invested $151,000 in cash to start the business.
2. Paid $5,100 for the current month’s rent.
3. Bought office furniture for $15,820 in cash.
4. Performed services for $7,300 in cash.
5. Paid $1,160 for the monthly telephone bill.
6. Performed services for $13,100 on credit.
7. Purchased a computer and copier for $36,200; paid $12,100 in cash immediately with the balance due in 30 days.
8. Received $6,550 from credit clients.
9. Paid $3,100 in cash for office cleaning services for the month.
10. Purchased additional office chairs for $4,900; received credit terms of 30 days.
11. Purchased office equipment for $31,000 and paid half of this amount in cash immediately; the balance is due in 30 days.
12. Issued a check for $8,500 to pay salaries.
13. Performed services for $13,600 in cash.
14. Performed services for $15,100 on credit.
15. Collected $7,100 on accounts receivable from charge customers.
16. Issued a check for $2,450 in partial payment of the amount owed for office chairs.
17. Paid $610 to a duplicating company for photocopy work performed during the month.
18. Paid $1,130 for the monthly electric bill.
19. Guttery withdrew $8,100 in cash for personal expenses.

Required:
Prepare a trial balance, an income statement, a statement of owner’s equity, and a balance sheet. Assume that the transactions took place during the month ended June 30, 2019. Determine the account balances before you start work on the financial statements.

Answer 1

Working as follows:

	Assets					=	Liabilities	+	Shareholders' Equity
Trans.	Cash	Accounts receivable	Office equipment	Computer and copier	Office furniture	=	Accounts payable	+	Owner's capital	Revenue	Telephone expense	Office cleaning expn.	Utilities Expn.	Photocopy expn.	Rent expense	Salaries expn.	Drawings
a	$151,000								$151,000
b	($5,100)														($5,100)
c	($15,820)				$15,820
d	$7,300									$7,300
e	($1,160)										($1,160)
f		$13,100								$13,100
g	($12,100)			$36,200			$24,100
h	$6,550	($6,550)
i	($3,100)											($3,100)
j					$4,900		$4,900
k	($15,500)		$31,000				$15,500
l	($8,500)															($8,500)
m	$13,600									$13,600
n		$15,100								$15,100
o	$7,100	($7,100)
p	($2,450)						($2,450)
q	($610)													($610)
r	($1,130)												($1,130)
s	($8,100)																($8,100)
Total	$111,980	$14,550	$31,000	$36,200	$20,720		$42,050		$151,000	$49,100	($1,160)	($3,100)	($1,130)	($610)	($5,100)	($8,500)	($8,100)

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Prepare trial balance as follows:

Trial balance Debit Credit Cash $111.980 Accounts receivable $14,550 Office equipment $31,000 Computer and copier $36,200 Office furniture $20.720 Accounts payable $42,050 Owner's capital $151,000 Revenue $49,100 Telephone expense Office cleaning expn. $3.100 Utilities Expn. $1,130 Photocopy expn. S610 Rent expense $5.100 Salaries expn. $8.500 Drawings $8.100 Total $242,150 $242,150

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Prepare Income statement as follows:

$49,100 Income Statement Revenue: Less: Expenses Telephone expense I $1,160 Office cleaning expn. $3.100 Utilities Expn. $1.130 Photocopy expn. $610 Rent expense $5.100 Salaries expn. $8,500 $19,600 Net Income $29,500

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Prepare Statement of Owner's equity:

Statement of owner's equity Beginning bal. Add: Invested $151,000 Add: Net income $29,500 Less: drawings (58.100) Ending bal. $172,400

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Prepare balance sheet as follows:

Balance Sheet Assets Cash Accounts receivable Office equipment Computer and copier Office furniture $111,980 $14,550 $31,000 $36,200 $20,720 Total Assets $214,450 Liabilities Accounts payable $42.050 Owner's equity S172,400 Total liabilities & OE $214.450