PROBLEM 2.16: Simple Transactions A. Kris formed a consulting business, KrisCo M
ID: 2331982 • Letter: P
Question
PROBLEM 2.16: Simple Transactions A. Kris formed a consulting business, KrisCo Management Consulting in September. Ope October. The following events occurred during the month of September: 1. Kris invested $10,000 into the business. 2. She hired an assistant who will be paid $2,000 per month. The assistant begins work on Oct. I. 3. Signed a lease agreement for office space at a cost of $1,000 per month. Paid the first three months in rations will begin advance. The business will move in on October 1. 4. Borrowed $25,000 from the local bank. The loan bears interest. 5. Bought $6,000 in used office equipment. The equipment will be used for 4 years.Explanation / Answer
Answers
ASSETS =
LIABILITIES +
EQUITY
Transaction no.
Cash
Prepaid Rent
Office Equipment
Bank Loan
Kris, Capital
1
$ 10,000.00
$ 10,000.00
2
No Treatment required. Its not a transaction to be recorded.
3
$ (3,000.00)
$ 3,000.00
4
$ 25,000.00
$ 25,000.00
5
$ 6,000.00
$ 6,000.00
Ending Balance
$ 32,000.00
$ 3,000.00
$ 6,000.00
$ 25,000.00
$ 16,000.00
Transaction no.
Accounts title
Debit
Credit
1
Cash
$ 10,000.00
Kris, Capital
$ 10,000.00
(Amount of cash invested recorded as capital)
2
NO ENTRY is required. Its not an transactions. Entry will be recorded when salary is paid or when salary is due to be paid.
3
Prepaid rent [1000 x 3 months]
$ 3,000.00
Cash
$ 3,000.00
(3 month’s rent paid in advance in cash)
4
Bank Loan
$ 25,000.00
Kris, Capital
$ 25,000.00
(used equipment brought in)
5
Office Equipment
$ 6,000.00
Cash
$ 6,000.00
(Cash paid for purchasing Office Equipment)
ASSETS =
LIABILITIES +
EQUITY
Transaction no.
Cash
Prepaid Rent
Office Equipment
Bank Loan
Kris, Capital
1
$ 10,000.00
$ 10,000.00
2
No Treatment required. Its not a transaction to be recorded.
3
$ (3,000.00)
$ 3,000.00
4
$ 25,000.00
$ 25,000.00
5
$ 6,000.00
$ 6,000.00
Ending Balance
$ 32,000.00
$ 3,000.00
$ 6,000.00
$ 25,000.00
$ 16,000.00
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