On November 1 of the current year, Richard Parker established a sole proprietorship. The following transactions occurred during the month:

1. Received $19,000 from Parker as an investment in the business.

2. Paid $9,000 to acquire a used minivan.

3. Purchased $1,800 of office furniture on the account.

4. Provided $2,100 of consulting services on account.

5. Paid $300 of repair expenses.

6. Received $800 from clients who were previously billed in (4).

7. Paid $500 on account to the supplier of office furniture in (3).

8. Received a $150 electric bill, to be paid next month.

9. Processed a $600 withdrawal for Parker.

10. Received $250 from clients for consulting services rendered.

11. Returned a $450 office desk to the supplier. The supplier agreed to reduce the balance due from Parker.

Instructions

a. Arrange the following asset, liability, and owner’s equity elements of the accounting equation in a manner similar to that shown on page 18: Cash, Accounts Receivable, Office Furniture, Van, Accounts Payable, Investments/Withdrawals, and Revenues/Expenses.

b. Record each transaction on a separate line. After all, transactions have been recorded, compute the balance in each of the preceding items.

c. Answer the following questions for Parker:

(1) How much does the company owe to its creditors at month-end? On which financial statement(s) would this information be found?

(2) Did the company have a “good” month from an accounting viewpoint? Briefly explain.

Answer rating: 100% (QA)

a Cash Investment Purchase of minivan Payment of repairs Withdrawal for parker Receipt from customer ... View the full answer