Recording Transactions Randi had a hard time finding a summer job when she went
ID: 2502254 • Letter: R
Question
Recording Transactions
Randi had a hard time finding a summer job when she went homefrom college, so she decided to go into business for herself mowinglawns. She had the following business activities during the monthof June.
June 1 Used $300of her own money and borrowed $450 from the father to startthe
business.
2 Rented a usedpickup truck from an uncle for $85 per month. Paid for thefirst
month’s use.
3 Rented a lawnmower ($75per month), an edger ($50 per month), and a
wheelbarrow ($10 per month) at an equipment rental store. Paid thefirst
month’srental fees in full.
16 During the first twoweeks, performed $650 of lawn-mowing services. Customers
paid in cash. Paid out $67 for gas, oil, and othersupplies.
18 Paid$70 for a newspaper advertisement that had appeared earlier in themonth.
30 Duringthe last half of the month, performed $507 of lawn-mowing servicesand
collectedthe cash.
30 Paidout $105 for gas, oil, and other supplies.
30 Paidback one-half of the amount she had borrowed from her father plus$5 for
interest.
Randi knew from taking an accounting class at college that thefollowing accounts
would be needed to keep track of her business activities.
Cash Equipment Rental Expense
Note Payable –Dad Contributed Capital
ServiceRevenue Retained Earnings
Gas and OilExpense Advertising Expense
A. Show how each event would be entered intothe accounting system.
B. Prepare an income statement forRandi’s Lawn-mowing Service for the month of June.
C. Prepare a balance sheet as of June 30.
D. Did Randi make a smart decision when she startedher own business? What factors might be considered in making thatevaluation?
Explanation / Answer
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