P$1$ BUSINESS TRANSACTIONS $($PTRANS$)$

LEARNING OBJECTIVES

Show how financial position is affected by transactions.

Prepare three basic proprietorship financial statements.

Back$-$solve for cash balances.

Alter the worksheet to accommodate additional transactions.

Create a chart showing liability and equity categories.

Note: For a problem using the corporate form of business organization, download FTRANS from the website for this book found at

cengagebrain.com.

PROBLEM DATA

On June $1$ of the current year, Wilson Wood opened Woody's Web Services. This sole proprietorship had the following transactions during June.

a$.$ Opened a business checking account and made a deposit, $$9,000.$

b$.$ Paid rent for June for office space and computer equipment, $$3,000.$

c$.$ Purchased office supplies $($stamps$,$ pens, etc.$)$ on account, $$1,980.$

d$.$ Received cash for services rendered, $$4,500.$

e$.$ Paid creditor for office supplies purchased on account, $$1,400.$

f$.$ Purchased office supplies for cash, $$420.$

g$.$ Billed clients for consultations performed on account, $$4,600.$

h$.$ Paid monthly internet service bill of $$360.$

i$.$ Paid the secretary$\text{'}$s salary of $$2,400.$

j$.$ Returned $$300$ of office supplies purchased in transaction $f.$ Received a full refund.

k$.$ Received cash from clients previously billed, $$3,000.$

I. Cash was withdrawn for owner's personal use, $$2,000.$

REQUIREMENT

Review the printout of the worksheet PTRANS. You have been asked to complete the worksheet by recording these transactions.

Open the file PTRANS from the website for this book at

cengagebrain.com. Enter the formulas in the appropriate cells on the worksheet. Then enter the increases and decreases resulting from each transaction on the worksheet. For example, the first transaction increases the cash account by $$9,000$ and also increases the capital account by $$9,000.$ This transaction has already been recorded on the worksheet. The worksheet will automatically total each column as values are entered in that column. Enter negative numbers with a minus sign $(-).$ When you are finished, check row $26$ to make sure that total assets equal total liabilities and equity.

$26$

It has been determined that the cost of the supplies used during the month was $$600.$ Record the increase or decrease in the appropriate columns on the worksheet. This is transaction $m.$ Enter your name in cell A$1.$ Save the completed file as PTRANS$3.$ Print the worksheet. Also print your formulas. Check figure: Ending cash balance $($cell B$21),$ $$7,220.$

How does transaction $m$ differ from transactions a through I? In other words, why is it treated as a special item?

Use the space below to prepare an income statement, a statement of owner's equity $($capital statement$),$ and a balance sheet in good form for Woody's Web Services for the month of June.