N.A. James, a public accountant, decided to begin a business of his own on October 1, 20-. At that time, he invested in the business a bank balance of $5,000 and an automobile worth $18,000.

The accounts required are provided for you in the forms.

A. Record the above transaction in the T-accounts provided.

B. For each of the transactions listed below, work out the changes for the transaction and record these changes in the T-accounts.

N.A James
Chart of Accounts
101	Bank	302	N.A. James, Drawings
110	A/R - Jenkins and Co.	401	Fees Earned
120	Office Supplies	505	Advertising Expense
125	Office Equipment	510	Car Expense
130	Automobiles	515	Donations Expense
210	A/P - Office Supply Co.	520	Miscellaneous Expense
301	N.A. James, Capital

Transactions - a few answers are given.

Purchased $300 of office supplies for cash. Issued a cheque.When issuing a cheque, it is like paying with cash, therefore the transaction would be
(debit Office Supplies/credit Cash)

Issued a cheque for $50 for an advertisement in a local newspaper.

Received a bill from Office Supply Co. for a desk, chair and a filing cabinet at a total cost of $1,100 on account.
(Dr. Office Equip / Cr. A/P Office Supply Co.)

Mr. James was hired by a client, Jenkins and Co. At the conclusion of the work, Mr. James charged Jenkins and Co. $900 and issued a bill for this service performed on account.(Hint: no cash was received)

B. Masters, a client, paid $100 in cash for a bookkeeping service. W. Shields another client, paid $75 in cash for having her tax return prepared. The total of $175 was deposited in the bank. (Dr. Cash $175 / Cr. Feed Earned $175)

A cheque for $100 was sent as a donation to the Salvation Army.

A cheque for $300 was received from Jenkins and Co. on the account.

A cheque was issued to Office Supply Co. in full payment of the balance of its account.

Paid Louis's Service Station $120 for gasoline and repairs to the business automobile. A cheque was issued right away.

Performed an accounting service for T. Wu and received $200 cash in full payment. The owner, N.A. James did not deposit this money in the bank but kept it for his personal use. (Dr. Drawings / Cr. Fees Earned)

Issued a cheque for $750 in payment of the rent for the month of October.

Purchased $120 of office supplies from Grand & Toy. The purchase was paid for by cheque.

Issued a cheque for $50 for an advertisement in a local newspaper.

Issued a bill for $600 to Jenkins and Co. for accounting services performed on the account.

Issued a cheque for $60 for postage stamps. *Note - stamps are not considered supplies, they are a miscellaneous expense.

Issued a cheque for $500 to the owner for his personal use. (Dr. Drawings / Cr. Cash)

C. Balance the ledger by means of a trial balance. Look at this example if necessary - Trial Balance

D. Prepare an income statement for the period, which is the month of October 20--. Look at this example if necessary - Income Statement

E. Prepare a balance sheet with an expanded equity section. Use the one shown below as a guide.

N.A. James Balance Sheet October 31, 20--
Assets
Bank			XXXX
A/R - Jenkins and Co.			XXXX
Office Supplies			XXXX
Office Equipment			XXXX
Automobiles			XXXX
Total Assets	double underline total		Total here
Owner's Equity
N.A. James, Capital
Balance October 1 (from Trial Balance)		XXXX
Net Income (from Income Statement)	XXXX
Drawings (from Trial Balance)	XXXX
Increase in Capital (Income - Drawings)		XXXX
Balance October 31			XXXX
Total Equity (should match the Asset figure)		Dbl underline	XXXX

Answer rating: 100% (QA)

Bank Account Particulars Debit Amount Particulars Credit Amount NA James Capital 5000 Office Supplies 300 Fees Earned 175 Advertisement Expenses 50 AR ... View the full answer