Darren Waves worked as an accountant at a local accounting firm for five years after graduating from college. Recently, he opened his own accounting practice, which he operates as a corporation. The name of the new entity is Waves and Associates, Inc. Darren experienced the following events during the first month of operations. Some of the events were personal and did not affect the accounting practice. Others were business transactions and should be accounted for by the business.
Apr 3 Received $50,000 cash proceeds from refinancing his house.
5 $99,000 of common stock in the business was sold to Darren Waves. The cash proceeds were deposited in a new business bank account titled Waves and Associates, Inc.
7 Paid $750 cash for office supplies for the new accounting practice.
9 Purchased $3,800 of office furniture for the accounting practice and agreed to pay the vendor within three months.
10 Darren sold 1,200 shares of Toyota stock, which he had owned for several years, receiving $20,000 cash. The cash from the sale of stock was deposited in his personal bank account.
14 A representative of a large company telephoned Darren and told him of the company’s intention to hire Waves and Associates, Inc., as its accountants.
20 Finished accounting work for a client and sent the client a bill for $4,200. The client is expected to pay within two weeks.
27 Paid office rent, $700.
30 Paid $400 of dividends to shareholders of Waves and Associates, Inc.
1. Enter each transaction in the expanded accounting equation of Waves and Associates, Inc., as needed, calculating new balances after each transaction.
2. Determine the following items:
a. Total assets
b. Total liabilities
c. Total stockholders’ equity
d. Net income or net loss for April