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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Transactions; financial statements

On July 1, 2016, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July:

  1. a. Opened a business bank account with a deposit of $25,000 from personal funds.
  2. b. Purchased office supplies on account, $1,850.
  3. c. Paid creditor on account, $1,200.
  4. d. Earned sales commissions, receiving cash, $41,500.
  5. e. Paid rent on office and equipment for the month, $3,600.
  6. f. Withdrew cash for personal use, $4,000.
  7. g. Paid automobile expenses (including rental charge) for month, $3,050, and miscellaneous expenses, $1,600.
  8. h. Paid office salaries, $5,000.
  9. i. Determined that the cost of supplies on hand was $950; therefore, the cost of supplies used was $900.

Instructions

  1. 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:

Chapter 1, Problem 1.4APR, Transactions; financial statements On July 1, 2016, Pat Glenn established Half Moon Realty. Pat

  1. 2. Prepare an income statement for July, a statement of owner’s equity for July, and a balance sheet as of July 31.

1)

To determine

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Shareholders Equity

Business transaction:

Business transaction is a record of any economic activity, resulting in the change in the value of the assets, the liabilities, and the Shareholder’s equities, of a business. Business transaction is also referred to as financial transaction.

To Indicate: The effect of each given transaction of Company HMR on the accounting equation.

Explanation

Indicate the effect of the given transactions of Company HMR

2)

To determine

To Prepare: The financial statements for Company HMR for the month ended July 31, 2016.

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