CP 1-3 Transactions and financial statements incan, a junior in college, has bee

Question

CP 1-3 Transactions and financial statements incan, a junior in college, has been seeking ways to earn extra spending money As an active sports enthusiast, Lisa plays tennis regularly at the Phoenix Tennis Club, where her family has a membership. The president of the club recently approached Lisa with the proposal that she manage the club's tennis courts. Lisa's primary duty would be to supervise the operation of the club's four indoor and 10 outdoor courts, including court reservations. In return for her services, the club would pay Lisa $325 per week, plus Lisa could keep whatever she earned from lessons. The club and Lisa agreed to a one-month trial, after which both college career. On this basis, Lisa organized Serve-N-Volley. During September 2016, Lisa managed the tennis courts and entered into the following transactions: would consider an arrangement for the remaining two years of Lisa 's a. Opened a business account by depositing $950. b. Paid $300 for tennis supplies (practice tennis balls, etc.). th Paid $275 for the rental of video equipment to be used in offering lessons during September.

Explanation / Answer

1 Transaction Ref. Assets = Liabilities + Owner's equity Cash + Supplies = Accounts Payable + Lisa Duncan, Capital - Lisa Duncan, Drawing + Fees Earned - Salaries Expense - Rent Expense - Supplies Expense - Misc. Expense a. 950 950 b. -300 300 c. -275 275 d. -100 150 250 e. 1750 1750 f. 600 600 g. -800 800 h. -290 290 i. 1300 1300 j. -120 120 k. -400 400 2435 180 150 950 400 3650 800 525 120 290 2 Income statement Revenues: Fees earned 3650 Total revenues and gains (A) 3650 Expenses and losses: Supplies expense 120 Salaries expense 800 Rent expense 525 Misc. Expense 290 Total expenses (B) 1735 Net income (A)-(B) 1915 3 Statement of owner's equity Beginning balance of owner's capital 0 Add: Investment made 950 Add: Net income 1915 2865 Less; Withdrawals 400 Ending balance of owner's capital 2465 4 Balance sheet Assets Amount ($) Liabilities Amount ($) Cash 2435 Accounts payable 150 Supplies 180 Owner's equity 2465 Total assets 2615 Total liabilities & Owner's equity 2615 5 a. Income as waitress=10*30*4=$1200 Income from operating Serve N Volley=$1915 (Refer income statement) Hence,Operating Serve N Volley is the best alternative

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