Jose Loder established Bronco Consulting on August 1, 2019. The effect of each transaction and the balances after each transaction for August follow:
Assets 5Liabilities 1 Owner’s Equity Receivable + Supplies = Accounts Payable + Jose Loder, Capital − Jose Loder, Drawing + Fees Earned − Salaries Expense − Rent Expense − Auto Expense − Supplies Expense − Misc. Expense a. +75,000 +75,000 b. +9,000 +9,000 Bal. 75,000 9,000 9,000 75,000 c. +92,000 +92,000 Bal. 167,000 9,000 9,000 75,000 92,000 d. –27,000 –27,000 Bal. 140,000 9,000 9,000 75,000 92,000 –27,000 e. –6,000 –6,000 Bal. 134,000 9,000 3,000 75,000 92,000 –27,000 f. +33,000 +33,000 Bal. 134,000 33,000 9,000 3,000 75,000 125,000 –27,000 g. –23,000 –15,500 –7,500 Bal. 111,000 33,000 9,000 3,000 75,000 125,000 –27,000 –15,500 –7,500 h. –58,000 –58,000 Bal. 53,000 33,000 9,000 3,000 75,000 125,000 –58,000 –27,000 –15,500 –7,500 i. –6,100–6,100 Bal. 53,000 33,000 2,900 3,000 75,000 125,000 –58,000 –27,000 –15,500 –6,100 –7,500 j. –15,000–15,000 Bal. 38,000 33,000 2,900 3,000 75,000 –15,000 125,000 –58,000 –27,000 –15,500 –6,100 –7,500
Instructions
1. Prepare an income statement for the month ended August 31, 2019.
2. Prepare a statement of owner’s equity for the month ended August 31, 2019.
3. Prepare a balance sheet as of August 31, 2019.
4. (Optional) Prepare a statement of cash flows for the month ending August 31, 2019.
Answer:
1.
Fees earned$125,000
Expenses:
Salaries expense$58,000
Rent expense27,000
Auto expense15,500
Supplies expense6,100
Miscellaneous expense7,500
Total expenses114,100
Net income$ 10,900
2.
Jose Loder, capital, August 1, 2019$ 0
Investment on August 1, 2019$ 75,000
Net income for August10,900
Withdrawals(15,000)
Increase in owner’s equity70,900
Jose Loder, capital, August 31, 2019$70,900
3.
Cash$38,000
Accounts receivable33,000
Supplies2,900
Total assets$73,900
Accounts payable$ 3,000
Jose Loder, capital70,900
Total liabilities and owner’s equity$73,900
4. (Optional)
Cash flows from operating activities:
Cash receipts from customers$ 92,000
Cash payments for expenses and payments to
creditors*(114,000)
Net cash flow used for operating activities$(22,000)
Cash flows from investing activities0
Cash flows from financing activities:
Cash receipt of owner’s investment $ 75,000
Cash withdrawal by owner(15,000)
Net cash flow from financing activities60,000
Net increase in cash and August 31, 2019, cash balance $ 38,000
* $27,000 + $6,000 + $23,000 + $58,000; these amounts are taken from the cash column shown
in the problem.