Harry Harper LLC opened for business on July 1, 2017. During July the following
ID: 2516695 • Letter: H
Question
Harry Harper LLC opened for business on July 1, 2017. During July the following transactions were completed.
July 1: Harry invested $18,000 cash in the business.
July 1: Purchased used truck for $9,000, paying $2,000 cash and the balance on account.
July 3: Purchased cleaning supplies for $1,800 on account.
July 5: Paid $4,800 cash on two-year insurance policy effective July 1.
July 12: Billed customers $1,500 for cleaning services.
July 18: Paid $2,000 cash on amount owed on truck and $800 on amount owed on cleaning supplies.
July 20: Paid $1,700 cash for employee salaries.
July 21: Collected $400 cash from customers billed on July 12.
July 25: Billed customers $9,000 for cleaning services.
July 31: Paid gas and oil for month on truck $400.
July 31: Withdrew $500 cash for personal use.
The following adjusting entries are required for July 31:
Services provided but unbilled and uncollected at July 31 were $1,000.
Harry invested additional $1,500
Depreciation on equipment for the month was $350.
One month of the insurance expired.
An inventory count shows $400 of cleaning supplies on hand at July 31.
Accrued but unpaid employee salaries were $700.
2. Prepare the following financial statements as of July 31, 2017
Income statement -
Owner’s equity statement
Balance sheet
Explanation / Answer
Income Statement
Revenues:
Income from Cleaning Services $ 1,500
Billed Services $ 9,000
$ 10,500
Expenses:
Depreciation Expense $ 350
Wage Expense $ 2,400
Supplies Expense $ 1,800
Other Expense $ 400
Insurance $ 200
$ 5,150
NET INCOME $ 5,350
STATEMENT OF OWNERS EQUITY
Investment at beginning of the month $ 18,000
Net Income $ 5,350
Withdrawals during the month $ (500)
Investment at the end of the month $ 1,500
$ 24,350
BALANCE SHEET AS ON 31st JULY
1. EQUITY & LIABILITIES
a)Owner's Equity $ 24,350
b)Non current Liabilities
Unpaid Salaries $ 700
c)Current Liabilities
Creditors $ 6,000
$ 31,050
2. ASSETS:
a)Non current Assets
Truck (9000-350) $ 8,650
Insurance $ 4,600
b)Current Assets
Inventory
Debtors $ 10,100
Bank and cash $ 7,700
$ 31,050
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