Sole ProprietorshipHelen Franz is an architect who operates her own business. The accounts...

Sole Proprietorship

Helen Franz is an architect who operates her own business. The accounts and transactions for the business follow.

INSTRUCTIONS

(1) Analyze the transactions for January 2010. Record each in the appropriate T accounts. Use plus and minus signs in front of the amounts to show the increases and decreases. Identify each entry in the T account by writing the letter of the transaction next to the entry.

(2) Determine the account balances. Prepare a trial balance, an income statement, a statement of owner’s equity, and a balance sheet.

ASSETS

Cash

Accounts Receivable

Office Furniture

Office Equipment

LIABILITIES

Accounts Payable

OWNER’S EQUITY

Helen Franz, Capital

Helen Franz, Drawing

REVENUE

Fees Income

EXPENSES

Advertising Expense

Utilities Expense

Salaries Expense

Telephone Expense

Miscellaneous Expense

TRANSACTIONS

a. Helen Franz invested $15,000 in cash to start the business.

b. Paid $1,000 for advertisements in a design magazine.

c. Purchased office furniture for $2,000 in cash.

d. Performed services for $2,100 in cash.

e. Paid $187.50 for the monthly telephone bill.

f. Performed services for $1,305 on credit.

g. Purchased a fax machine for $287.50; paid $87.50 in cash with the balance due in 30 days.

h. Paid a bill for $325 from the office cleaning service.

i. Received $1,080 from clients on account.

j. Purchased additional office chairs for $540; received credit terms of 30 days.

k. Paid $2,000 for salaries.

l. Issued a check for $270 in partial payment of the amount owed for office chairs.

m. Received $1,400 in cash for services performed.

n. Issued a check for $280 for utilities expense.

o. Performed services for $2,100 on credit.

p. Collected $600 from clients on account.

q. Helen Franz withdrew $1,750 in cash for personal expenses.

r. Paid $300 to Quick Copy Service for photocopy work performed during the month.

Analyze: Using the basic accounting equation, what is the financial condition of Helen Franz’s business at month-end?