Also, its net income, for September 1 through September 30 was $20,000 and there were no investments or withdrawals by the owner. Determine the equity at both September 1 and September 30.
207. If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period, did the assets of the company increase or decrease? By what amount?
208. Hal Burton began a Web Consulting practice and completed these transactions during September of the current year:
Sept.
1 2
3
4 8 15 20 30 30
Invested $100,000 of his personal savings into a checking account opened in the name of the business.
Rented office space and paid $1,200 cash for the month of September.
Purchased office equipment for $30,000, paying $8,000 cash and agreeing to pay the balance in one year. Purchased office supplies for $750 cash.
Completed work for a client and immediately collected $2,700 cash for the services.
Completed $3,600 services for a client on credit.
Received $3,600 from a client for the work completed on September 15.
Paid the office secretary's monthly salary, $3,000 cash. Burton withdrew $2,000 for personal use.
Show the effects of the above transactions on the accounting equation of Halley Burton, Consultant. Use the following format for your answers. The first item is shown as an example.
Increase = I Decrease = D No effect = N Date Example: September 1 Assets Liabilities Equity I N I
209. For each of the following transactions, identify the effects as reflected in the
accounting equation. Use \\completed as an example.
a. L. Berryman invested $100,000 in
a sole proprietorship +A +E
b. Land was purchased for $50,000.
A down payment of $15,000 cash was made and a note was signed for the balance.
c. Services were rendered to
customers for cash.
d. A building was purchased for cash. e. Supplies were purchased for cash. f. Paid the office secretary's salary. g. The amount owed on the land from
Part (b) was paid.
210. The following schedule reflects shows the first month's transactions of the Bill Blue Real Estate Company:
Accounts
Accounts
Cash + Receivable + Supplies + Equipment
= Payable + 1. +20,000 2. -5,000 +5,000 3. +$1,500 +1,500 4. +3,000 5. +1,000 +1,500 6. -750 -750 7. +500 -500 8. -400 9. -2,000 Provide descriptions for each transaction.
211. The accountant of Magic Video Games prepared a balance sheet immediately after each transaction was recorded. During September, the first month of operation, the following balance sheets were prepared:
MAGIC VIDEO GAMES
Balance Sheet September 1 Assets
Equity
Cash……………………..
$60,000 I. Magic, Capital…………….. $60,000 B. Blue Capital +20,000
+3,000 +2,500
-400 -2,000
Total assets………………
$60,000 Total liabilities and
equity……………………..
$60,000 MAGIC VIDEO GAMES
Balance Sheet September 5
Assets Liabilities
Cash……………………. $48,000 Notes payable……. $18,000 Land……………………. 10,000 Building………………… 20,000 Total assets…………..
$78,000 Equity
I. Magic, Capital….. Total liabilities and equity……………..
60,000 $78,000 Assets
MAGIC VIDEO GAMES
Balance Sheet September 9 Liabilities
Accounts payable….
Notes payable……. Equity
I. Magic, Capital….. Total liabilities and equity……………..
$2,000 18,000
Cash……………………. $48,000 Office supplies………… 2,000 Land……………………. 10,000 Building………………… 20,000 Total assets…………..
$80,000
60,000 $80,000 MAGIC VIDEO GAMES
Balance Sheet September 11
Assets Liabilities
Cash……………………. $42,000 Accounts payable…. Office supplies………… 2,000 Notes payable……. Land……………………. Building………………… Office furniture………… Total assets…………..
10,000 20,000 6,000 $80,000 Equity
I. Magic, Capital…..
Total liabilities and equity……………..
$ 2,000 18,000
60,000 $80,000 Assets
MAGIC VIDEO GAMES
Balance Sheet September 15 Liabilities
Cash……………………. $32,000 Accounts payable…. Office supplies………… 2,000 Notes payable……. Land……………………. Building…………………
10,000 Equity
20,000 I. Magic, Capital…..
$ 2,000 18,000 60,000 Office furniture………… 6,000 Total liabilities and Total assets………….. $70,000 equity……………..
$70,000 Required: Describe the nature of each of these five transactions for the month of September.
Sept
1 5 9 11 15
212. Identify the risk and the return in each of the following examples. a. Investing $500 in a CD at 4.5% interest. b. Placing a $100 bet on an NBA game. c. Investing $10,000 in Microsoft stock. d. Borrowing $20,000 in student loans.
213. Prepare a November 30 balance sheet in proper form for Green Bay Delivery Service from the following alphabetical list of the accounts at November 30: Accounts receivable………………….. Accounts payable…………………………..
$10,000 18,000
Building…………………………………….... 28,000 Cash………………………….…………….... 8,000 Notes payable………………………………. 45,000 Office equipment……………...…………….. 12,000 R. Perkins, Capital………………………….. ? Trucks……………………………………….. 55,000
214. Prepare a December 31 balance sheet in proper form for Surety Insurance using the following accounts and amounts: Commissions earned……....... $40,000 Accounts payable……………… 3,500 Accounts receivable…………… 5,000 M. Bruno, Capital……………… 103,500 Office equipment………………. 10,000 Advertising expense…………. 3,200 Cash…………………………….. 7,500 Land...................................... 35,000 Note payable.......................... 50,000 Office supplies........................ 500 Salaries expense.................... 12,000
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