1.Analyze the effects of Draper Consulting transactions on the accounting equation. Use the format of Exhibit 1-6, and include these headings: Cash; Accounts receivable; Supplies; Equipment; Furniture; Accounts payable; and Draper, capital.
2.Prepare the income statement of Draper Consulting for
the month ended December 31, 2012.
3.Prepare the statement of owner’s equity for the month ended December 31, 2012.
4.Prepare the balance sheet at December 31, 2012.
PANEL A—Details of Transactions
1. Received $18,000 cash and gave capital to Draper.
2. Paid monthly office rent, $550.
3. Paid cash for a Dell computer, $1,800. This equipment is expected to remain in service for five years.
4. Purchased office furniture on account, $4,200. The furniture should last for five years.
5. Purchased supplies on account, $900.
6. Performed consulting service for a client on account, $1,500.
7. Paid utility expenses, $250.
8. Performed service for a client and received cash of $1,100.
The Accrual basis of accounting is far superior to the Cash basis of accounting. Discuss. The difference between accrual and cash basis of accounting is cash basis accounting recognizes revenues and expenses depends upon on timing. Cash basis accounting is simple, recognizes revenues when cash is received and recognizes expenses when cash is paid out only. It does not record accounts payable or ...
1 Received $42,000 cash and gave capital to Stewart.
4 Purchased supplies, $700, and furniture, $1,900, on account. 6 Performed services for a law firm and received $1,400 cash. 7 Paid $24,000 cash to acquire land for a future office site. 10 Performed service for a hotel and received its promise to pay the $1,000 within one week. 14 Paid for the furniture purchased September 4 on account. 15 Paid secretary’s bi-monthly salary, $490.
17 Received cash on account, $400.
20 Prepared a design for a school on account, $700.
28 Received $2,100 cash for consulting with Plummer & Gorden. 30 Paid secretary’s bi-monthly salary, $490.
30 Paid rent expense, $650.
30 Stewart withdrew cash of $3,000.
1.Open the following T-accounts: Cash; Accounts receivable; Supplies;
Furniture; Land; Accounts payable; Stewart, capital; Stewart, drawing; Service revenue; Salary expense; and Rent expense. 2.Record each transaction in the journal, using the account titles given. Key each transaction by date. Explanations are not required. 3.Post the transactions to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal, as shown in the chapter. 4.Prepare the trial balance of Doris Stewart, Designer, at September 30, 2012.