Case Study

Applying the accounting cycle

On October 2018, Sarah began a car repair shop, Sarah Automotive. The following information about transactions from October to December 2018

Transactions:

Oct1, Sarahinvested$50,000 cash to the business in exchange for capital.

1.Nov5, Purchased land to be used in operations for $20,000 cash.

2.Nov10, Purchased$12,000 of equipment paying cash

3.Dec 1, Paid $4,500 for a 9-month insurance policy starting on December 1.

4.Dec 4, Borrowed $30,000 from the bank for business use. Sarah signed a note payable to the bank in the name of the business.

5.Dec 8, Purchased office supplies on account, $3,000.