P1-48 Analyzing transactions and preparing financial statements [20–25 min]

P1-48 Analyzing transactions and preparing financial statements [20–25 min]

ACC 205 Week 1 P1-48 - Draper Consulting began operations and completed the following transactions during the first half of December:

P1-48 Analyzing transactions and preparing financial statements [20–25 min]

P1-48 Draper Consulting began operations and completed the following transactions during the first half of December:

Dec 2	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.
9	Performed consulting service for a client on account, $1,500.
12	Paid utility expenses, $250
18	Performed service for a client and received cash of $1,100.

. Requirements
1. Analyze the effects of Draper Consulting's 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.

SOLUTION PREVIEW
Req. 1

 Analysis of Transactions                                                                                                                                                                                                                                                   Draper Consulting

ASSETS					=  LIABILITIES + OWNER’S EQUITY
DATE	CASH   +	ACCOUNTS   RECEIVABLE  +	SUPPLIES+	EQUIPMENT  +	FURNITURE  =	ACCOUNTS PAYABLE +	DRAPER, CAPITAL	TYPE OF OWNER’S EQUITY TRANSACTION
Dec.    2	18,000	____	____	____	____	____	18,000	Owner’s investment
Bal.	18,000	0	0	0	0	0	18,000

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