Wednesday, May 29, 2013

Tabular summary of the transaction


Exercises-Answers:

Problem 1. Mary Malone opens her own law office on July 1, 20X1. During the first month of operations. the following transactions occurred:
1. Invested $ 10,000 in cash in the law practice.
2. Paid $ 800 for July rent on office space.
3. Purchased office equipment on account, $ 3,000
4. Rendered legal services to clients for cash, $1,500. (use Fees Earned)
5. Borrowed $700 cash from a bank on a note payable
6. Rendered legal services to client on account, $ 2,000
7. Paid monthly expenses: salaries, $500; Utilities, $300; and telephone, $100
Instruction:
(a). Prepare the tabular summary of the transaction (accounting equation)
(b). Prepare the income statement, Owner's Equity Statement, and Balance Sheet at July 31 for
Mary Malone, attorney at law.

Resolutions

(a). Prepare the tabular summary of the transaction (accounting equation)





(b). Prepare Financial Statement

MM Company
Income Statement
For the end of July 31, 20X1
Revenue:
        Fee earned                                                                                         $  1,500
        Fee earned                                                                                             2,000
        Total Revenue                                                                                                           $  3,500
Expenses:
        Rent expense                                                                                    $      800
        Salary expense                                                                                         500
        Utilities expense                                                                                      300
        Telephone expense                                                                               100
        Total Expenses                                                                                                          $  1,700
Net Income                                                                                       $  1,800




MM Company
Statement of Owner’s Equity
For the end of July 31, 20X1
Beginning Capital                                                                                     $            0
Add: Investment                                                                                      $  10,000
          Net Income                                                                                      $    1,800
Less: Withdrawal                                                                                                     0
Ending Capital of July 31,20X1                                                             $  11,800




MM Company

Balance Sheet
For the end of July 31,20X1
Assets:                                                 Liabilities:
Cash                           10,500               Account Payable          3,000
Account Receivable       2,000              Note Payable                  700
Equipment                     3,000              Total Liabilities             3,700
Total assets                  15,500             Owner’s Equities
                                                            Ending Capital             11,800
                                                            Total L & OE                15,500


Problem 2: The balance of the account of Dr.J.Hoflich. Dentist, appear as follows:
Account Payable                     $   2,800
Account Receivable                     3,600
Building                                      12,000
Capital, January 1, 20XX            19,000
Cash                                           12,200
Dental Income                           38,000
Drawing                                       6,000
Equipment                                  15,000
Furniture                                      3,000
Mortgage Payable                     10,000
Miscellaneous expense               2,000
Note Payable                               2,000
Supplies                                       6,000
Salary Expense                            8,000
Supplies Expense                         4,000
Require:
Prepare the income statement, statement of owner’s Equity, and Balance Sheet.

Prepare financial statement
Dr.J.Hoflich Company
Income Statement
For The end of December 31, 20XX
Revenue:                                                 
Dental Income                                          38,000                  
Expenses:
Miscellaneous expense              2,000
Salary expense                           8,000
Supplies expense                        4,000
Total expense                                            14,000
Net Income                                              $24,000


Dr.J.Hoflich Company

Statement of Owner’s Equity

For the end of month, December 31, 20XX

Capital, January 1, 20XX           19,000
Add: Net income                       24,000
Minus: Drawing                          6,000
Ending Capital                       $37,000




Dr.J.Hoflich Company
Balance Sheet
For the end of month, December 31, 20XX
Assets                                                                         Liabilities
Cash                                                   12,200      Account Payable                2,800
Account Receivable                        3,600       Note Payable                     2,000
Supplies                                              6,000       Mortgage Payable             10,000
Building                                            12,000       Total Liabilities                  14,800
Equipment                                        15,000       Equity
Furniture                                            3,000       Capital                                 37,000
Total Assets                                    51,800       Total L & OE                        51,800

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