Kenny Young has started his own business, Home and Away Inspections. He inspects property for buyers...

  

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Kenny Young has started his own business, Home and Away Inspections. He inspects property for buyers and sellers of real estate. Young rents office space and has a part- time assistant to answer the phone and help with inspections. The transactions for the month of September are as follows: (a) On the first day of the month, Young invested cash by making a deposit in a bank account for the business, $15,000. (b) Paid rent for September, $300. (c) Bought a used truck for cash, $8,000. (d) Purchased tools on account from Crafty Tools, $3,000. (e) Paid electricity bill, $50. (f) Paid two-year premium for liability insurance on truck, $600. (g) Received cash from clients for services performed, $2,000. (h) Paid part-time assistant (wages) for first half of month, $200. (i) Performed inspection services for clients on account, $1,000. (i) Paid telephone bill, $35. (k) Bought office supplies costing $300. Paid $100 cash and will pay the balance next month, $200. (1) Received cash from clients for inspections performed on account in (i), $300. (m) Paid part-time assistant (wages) for last half of month, $250. (n) Made partial payment on tools bought in (d), $1,000. (0) Earned additional revenues amounting to $2,000: $1,400 in cash and $600 on account. (p) Young withdrew cash at the end of the month for personal expenses, $500. REQUIRED 1. Enter the transactions in an accounting equation similar to the one illustrated below. Assets Liabilities + Owner's Equity (Items Owned) (Amounts Owed) (Owner's Investment) + (Earnings) Kenny + Young Capital Kenny Young, + Revenues - Expenses Description Drawing Accounts Prepaid Insurance Tools + Truck Accounts Cash + + Supplies + Receivable Payable 2. Compute the ending balances for all accounts. 3. Prepare an income statement for Home and Away Inspections for the month of September 20-. 4. Prepare a statement of owner's equity for Home and Away Inspections for the month of September 20--. 5. Prepare a balance sheet for Home and Away Inspections as of September 30, 20-. Solution 1, 2. Kenny Young has started his own business, Home and Away Inspections. He inspects property for buyers and sellers of real estate. Young rents office space and has a part- time assistant to answer the phone and help with inspections. The transactions for the month of September are as follows: (a) On the first day of the month, Young invested cash by making a deposit in a bank account for the business, $15,000. (b) Paid rent for September, $300. (c) Bought a used truck for cash, $8,000. (d) Purchased tools on account from Crafty Tools, $3,000. (e) Paid electricity bill, $50. (f) Paid two-year premium for liability insurance on truck, $600. (g) Received cash from clients for services performed, $2,000. (h) Paid part-time assistant (wages) for first half of month, $200. (i) Performed inspection services for clients on account, $1,000. (i) Paid telephone bill, $35. (k) Bought office supplies costing $300. Paid $100 cash and will pay the balance next month, $200. (1) Received cash from clients for inspections performed on account in (i), $300. (m) Paid part-time assistant (wages) for last half of month, $250. (n) Made partial payment on tools bought in (d), $1,000. (0) Earned additional revenues amounting to $2,000: $1,400 in cash and $600 on account. (p) Young withdrew cash at the end of the month for personal expenses, $500. REQUIRED 1. Enter the transactions in an accounting equation similar to the one illustrated below. Assets Liabilities + Owner's Equity (Items Owned) (Amounts Owed) (Owner's Investment) + (Earnings) Kenny + Young Capital Kenny Young, + Revenues - Expenses Description Drawing Accounts Prepaid Insurance Tools + Truck Accounts Cash + + Supplies + Receivable Payable 2. Compute the ending balances for all accounts. 3. Prepare an income statement for Home and Away Inspections for the month of September 20-. 4. Prepare a statement of owner's equity for Home and Away Inspections for the month of September 20--. 5. Prepare a balance sheet for Home and Away Inspections as of September 30, 20-. Solution 1, 2.