Chapter 1, Problem 1.54CP

Using the accounting equation for transaction analysis, preparing financial statements, and calculating return on assets (ROA)

Daniels Consulting began operations and completed the following transactions during December 2016:

Dec. 2	Stockholders contributed $20,000 cash in exchange for common stock.
2	Paid monthly office rent, $2,000.
3	Paid cash for a computer, $3,600. This equipment is expected to remain in service for five years.
4	Purchased office furniture on account, $3,000. The furniture should last for five years.
5	Purchased office supplies on account, $800.
9	Performed consulting service for a client on account, $2,500.
12	Paid utilities expenses, $150.
18	Performed service for a client and received cash of $2, 1 00.
21	Received $2,400 in advance for client service to be performed in the future. (This increases the Unearned Revenue account, which is a liability. This account will be explained in more detail in Chapter 2.)
21	Hired an administrative assistant to be paid $2,055 on the 20th day of each month. The secretary begins work immediately.
26	Paid $200 on account.
28	Collected $400 on account.
30	Cash dividends of $1,000 were paid to stockholders.

Requirements

1. 1. Analyze the effects of Daniels Consulting’s transactions on the accounting equation. Use the format of Exhibit 1-6, and include these headings: Cash; Accounts Receivable; Office Supplies; Equipment; Furniture; Accounts Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Rent Expense; and Utilities Expense.
2. 2. Prepare the income statement of Daniels Consulting for the month ended December 31, 2016.
3. 3. Prepare the statement of retained earnings for the month ended December 31, 2016.
4. 4. Prepare the balance sheet as of December 31, 2016.
5. 5. Calculate the return on assets for Daniels Consulting for December, 2016.