Question: Leora diamond began a professional practice on june 1 and

Leora Diamond began a professional practice on June 1 and plans to prepare financial statements at the end of each month. During June, Diamond (the owner) completed these transactions:
a. Owner invested $70,000 cash in the company along with equipment that had a $20,000 market value in exchange for common stock.
b. The company paid $2,000 cash for rent of office space for the month.
c. The company purchased $25,000 of additional equipment on credit (payment due within 30 days).
d. The company completed work for a client and immediately collected the $3,000 cash earned.
e. The company completed work for a client and sent a bill for $9,500 to be received within 30 days.
f. The company purchased additional equipment for $5,000 cash.
g. The company paid an assistant $3,500 cash as wages for the month.
h. The company collected $6,500 cash as a partial payment for the amount owed by the client in trans action e.
i. The company paid $25,000 cash to settle the liability created in transaction c.
j. The company paid $1,500 cash dividends to the owner.
Create a table like the one in Exhibit 1.9, using the following headings for columns: Cash; Accounts Receivable; Equipment; Accounts Payable; Common Stock; Dividends; Revenues; and Expenses. Then use additions and subtractions to show the effects of the transactions on individual items of the accounting equation. Show new balances after each transaction.

View Solution:

Sale on SolutionInn
  • CreatedMarch 18, 2015
  • Files Included
Post your question