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Chapter 1: 45PGA_2c (page 46)

Allen Shonton recently opened his own accounting firm on April 1, which he operates as a corporation. The name of the new entity is Allen Shonton, CPA. Shonton experienced the following events during the organizing phase of the new business and its first month of operations in 2018: Apr. 5 Shonton deposited \(75,000 in a new business bank account titled Allen Shonton, CPA. The business issued common stock to Shonton. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(9,500. 10 Consulted with tax client and received \)4,000 for services rendered. 11 Paid utilities, \(190. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)20,000. 18 Paid office rent, \(750. 25 Received amount due from client that was billed on April 12. 27 Paid full amount of accounts payable created on April 7. 30 Cash dividends of \)3,500 were paid to stockholders. Requirements 2. Prepare the following financial statements: c. Balance sheet

Short Answer

Expert verified

In the balance sheet, total assets equals $94,560, total liabilities equals $0, and total stockholders鈥� equity equals $94,560.

Step by step solution

01

Explanation on Balance Sheet

Balance sheet represents the ending balances of assets, liabilities, and owners鈥� equity of a corporation at the end of a particular accounting period.

02

Details of balance sheet

Allen Shonton, CPA. Shonton

Balance Sheet

April 30, 2018

Assets

Liabilities

Cash

$84,760

Accounts Payable

$0

Letterhead Stationary

300

Office Furniture

9,500

Stockholders鈥� Equity

Common Stock

75,000

Retained Earnings

19,560

Total Stockholders鈥� Equity

$94,560

Total Assets

$94,560

Total Liabilities and Stockholders鈥� Equity

$94,560

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Canyon Canoe Company is a service-based company that rents canoes for use on local lakes and rivers. Amber and Zack Wilson graduated from college about 10 years ago. They both worked for one of the 鈥淏ig Four鈥� accounting firms and became CPAs. Because they both love the outdoors, they decided to begin a new business that will combine their love of outdoor activities with their business knowledge. Amber and Zack decide that they will create a new corporation, Canyon Canoe Company, or CCC for short. The business began operations on November 1, 2018. Nov. 1 Received \(16,000 cash to begin the company and issued common stock to Amber and Zack. 2 Signed a lease for a building and paid \)1,200 for the first month鈥檚 rent. 3 Purchased canoes for \(4,800 on account. 4 Purchased office supplies on account, \)750. 7 Earned \(1,400 cash for rental of canoes. 13 Paid \)1,500 cash for wages. 15 Paid \(50 dividends to stockholders. 16 Received a bill for \)150 for utilities. (Use separate payable account.) 20 Received a bill for \(175 for cell phone expenses. (Use separate payable account.) 22 Rented canoes to Early Start Daycare on account, \)3,000. 26 Paid \(1,000 on account related to the November 3, 2018, purchase. 28 Received \)750 from Early Start Daycare for canoe rental on November 22, 2018. 30 Paid $100 dividends to stockholders. Requirements 3. Prepare the statement of retained earnings for the month ended November 30, 2018.

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