Jill Smith starts an apartment locator business that has the following transacti

Question

Jill Smith starts an apartment locator business that has the following transactions in the first month:

a) Smith invests $35,000 of personal funds to start the business.

b) She purchases on account office supplies costing $350.

c) She pays cash of $30,000 to acquire a lot next to the campus. This will be the future home of the business.

d) Smith locates apartments for client and receives cash of $1900.

e) Smith pays $100 of the account payable she created in transaction (b).

f) She pays $2000 of personal funds for a vacation.

g) She pays cash for expenses for office rent, $400, and utilities, $100.

h) The business sells office supplies to another business for its cost of $150.

i) Smith with drawls cash of $1200 personal use.

Account for these transactions and create a balance sheet as of the end of the month and income statement for the month on the next page.

Accounting for the Transactions:

Assets

a

b

c

d

e

f

g

h

i

j

Balance Month End

   Cash

   Office Supplies

   Land

Liabilities

Accounts Payable

Owner’s Equity

Balance Sheet at Month End

Assets

$ Amount

Liabilities and Owners Equity

S Amount

     Cash

$

Accounts Payable

$

     Office Supplies

$

Owner’s Equity

$

     Land

$

            Total

$

Total

$

                           Income Statement for end of Month

$ Operating Revenue (for finding apartments)

$

    Less Rent Cost

$

    Less Utilities Cost

$

Net Income

$

Assets

a

b

c

d

e

f

g

h

i

j

Balance Month End

   Cash

   Office Supplies

   Land

Liabilities

Accounts Payable

Owner’s Equity

Explanation / Answer

1)Accounting for transaction:

Balance sheet:

Income statement

Asset a b c d e f g h i j Balance month end cash +35000 -30000 +1900 -100 -2000 -500 +150 -1200 3250 Office supplies +350 -150 200 Land +30000 30000 Liabilities Accounts payable +350 -100 250 Owners equity +35000 +1900 -2000 -500 -1200 33200

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