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Magazine Chapter 1: 48PGB (page 48)
Cosmo Thomas started a new business, Thomas Gymnastics, and completed the following transactions during December: Dec. 1 Received \(19,000 cash from Thomas in exchange for common stock. 2 Received \)3,800 cash from customers for services performed. 5 Paid \(300 cash for office supplies. 9 Performed services for a customer and billed the customer for services rendered, \)4,500. 10 Received \(150 invoice for utilities due in two weeks. 15 Paid for advertising in the local paper, \)350. 20 Paid utility invoice received on Dec. 10. 25 Collected cash in full from customer billed on Dec. 9. 28 Paid rent for the month, \(2,600. 28 Paid \)1,200 to assistant for wages. 30 Received \(1,600 cash from customers for services performed. 31 Cash dividends of \)3,000 were paid to stockholders. Analyze the effects of the transactions on the accounting equation of Thomas Gymnastics using a format similar to Exhibit 1-6.
Short Answer
Effect of the transaction on the accounting equation is shown as follows:
Assets | = | Liabilities | + | Equity | ||||||||||||||||||
Contributed Capital | + | Retained Earnings | ||||||||||||||||||||
Cash | + | Accounts Receivable | + | Office Supplies | Accounts Payable | Common Stock | - | Dividends | + | Service Revenue | - | Rent Expense | - | Advertising Expense | - | Salaries Expense | - | Utilities Expense | ||||
Dec.1 | +19,000 | +19,000 | ||||||||||||||||||||
Bal. | $19,000 | = | + | $19,000 | ||||||||||||||||||
Dec.2 | +3,800 | +3,800 | ||||||||||||||||||||
Bal. | $22,800 | = | + | $19,000 | + | $3,800 | ||||||||||||||||
Dec.5 | -300 | +300 | ||||||||||||||||||||
Bal. | $22,500 | + | $300 | = | + | $19,000 | + | $3,800 | ||||||||||||||
Dec.9 | +4,500 | +4,500 | ||||||||||||||||||||
Bal. | $22,500 | + | $4,500 | + | $300 | = | + | $19,000 | + | $8,300 | ||||||||||||
Dec.10 | +150 | -150 | ||||||||||||||||||||
Bal. | $22,500 | + | $4,500 | + | $300 | = | $150 | + | $19,000 | + | $8,300 | - | $150 | |||||||||
Dec.15 | -350 | -350 | ||||||||||||||||||||
Bal. | $22,150 | + | $4,500 | + | $300 | = | $150 | + | $19,000 | + | $8,300 | - | $350 | - | $150 | |||||||
Dec. 20 | -150 | -150 | ||||||||||||||||||||
Bal. | $22,000 | + | $4,500 | + | $300 | = | $0 | + | $19,000 | + | $8,300 | - | $350 | - | $150 | |||||||
Dec.25 | +4,500 | -4,500 | ||||||||||||||||||||
Bal. | $26,500 | + | $0 | + | $300 | = | $0 | + | $19,000 | + | $8,300 | - | $350 | - | $150 | |||||||
Dec.28 | -3,800 | -2600 | -1200 | |||||||||||||||||||
Bal. | $22,700 | + | $0 | + | $300 | = | $0 | + | $19,000 | + | $8,300 | - | $2,600 | - | $350 | - | $1,200 | - | $150 | |||
Dec.30 | +1,600 | +1,600 | ||||||||||||||||||||
Bal. | $24,300 | + | $0 | + | $300 | = | $0 | + | $19,000 | + | $9,900 | - | $2,600 | - | $350 | - | $1,200 | - | $150 | |||
Dec.31 | -3,000 | -3,000 | ||||||||||||||||||||
Bal. | $21,300 | + | $0 | + | $300 | = | $0 | + | $19,000 | - | $3,000 | + | $9,900 | - | $2,600 | - | $350 | - | $1,200 | - | $150 | |
$21,600 | = | $21,600 |
Step by step solution
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