Sara-Jayne Parsons is an architect who operates her own business. The accounts and transactions for the business follow.

INSTRUCTIONS

1. Analyze the transactions for January 20X1. Record each in the appropriate T accounts. Identify each entry in the T account by writing the letter of the transaction next to the entry.

2. Determine the account balances. Prepare a trial balance, an income statement, a statement of owner’s equity, and a balance sheet for Sara-Jayne Parsons, Architect.

ASSETS
Cash
Accounts Receivable
Furniture
Equipment
LIABILITIES
Accounts Payable
OWNER’S EQUITY
Sara-Jayne Parsons, Capital
Sara-Jayne Parsons, Drawing
REVENUE
Fees Income
EXPENSES
Advertising Expense
Utilities Expense
Salaries Expense
Telephone Expense
Miscellaneous Expense

Analyze: 

Using the basic accounting equation, what is the financial condition of Sara-Jayne Parsons’s business at the end of the month?

Transcribed Image Text:

TRANSACTIONS 123456 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Sara-Jayne Parsons invested $75,000 in cash to start the business. Paid $4,200 for advertisements in a design magazine. Purchased furniture for $6,400 in cash. Performed services for $10,200 in cash. Paid $375 for the monthly telephone bill. Performed services for $6,880 on credit. Purchased equipment, a fax machine, for $550; paid $150 in cash, with the balance due in 30 days. Paid a bill for $1,300 from the office cleaning service (debit miscellaneous expense). Received $3,375 from clients on account. Purchased furniture (office chairs) for $1,575; received credit terms of 30 days. Paid $9,200 for salaries. Issued a check for $575 in partial payment of the amount owed for furniture (office chairs). Received $6,400 in cash for services performed. Issued a check for $825 for utilities expense. 15. Performed services for $3,800 on credit. 16. Collected $3,800 from clients on account. 13. 14. 17. Sara-Jayne Parsons withdrew $5,500 in cash for personal expenses. 18. Paid $1,175 to Quick Copy for photocopy work performed during the month (debit miscellaneous expense).