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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Craig Fisher started a lawn service called Craig’s Quick Cut to earn money over the summer months. Fisher has decided to use the following accounts for recording transactions:

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Transactions for the month of June are listed below.

  1. (a) Invested cash in the business, $3,000.
  2. (b) Bought mowing equipment for $1,000: paid $200 in cash and promised to pay the balance over the next four months.
  3. (c) Paid garage rent for June, $50.
  4. (d) Provided lawn services for customers on account, $520.
  5. (e) Paid phone bill, $30.
  6. (f) Borrowed cash from the bank by signing a note payable, $500.
  7. (g) Bought lawn tools, $480.
  8. (h) Collected cash from customers for services performed on account in transaction (d), $400.
  9. (i) Paid associates for lawn work done during the first half of the month, $350.
  10. (j) Paid for gas and oil for the equipment, $60.
  11. (k) Paid cash on account for the mowing equipment purchased in transaction (b), $200.
  12. (l) Earned lawn fees of $1,320: $600 in cash and $720 on account.
  13. (m) Paid associates for last half of month, $700.
  14. (n) Reimbursed associates for costs incurred using their own vehicles for transportation, $150.
  15. (o) Paid on note payable to bank, $100.
  16. (p) Withdrew cash for personal use, $200.

REQUIRED

  1. 1. Enter the transactions for June in T accounts. Use the accounting equation as a guide for setting up the T accounts.
  2. 2. Foot and balance the T accounts where necessary.
  3. 3. Prepare a trial balance of the accounts as of June 30, 20--.
  4. 4. Prepare an income statement for the month ended June 30, 20--.
  5. 5. Prepare a statement of owner’s equity for the month ended June 30, 20--.
  6. 6. Prepare a balance sheet as of June 30, 20--.

REQUIRED

  1. 1. Enter the transactions in T accounts, identifying each transaction with its corresponding letter.
  2. 2. Foot and balance the accounts where necessary.
  3. 3. Prepare a trial balance as of August 31, 20--.

1 and 2.

To determine

Enter the transactions for June in T accounts and foot the balance of T accounts.

Explanation

Analysis of transactions: A transaction refers to any business event that affects assets, liabilities and stockholders’ equity or owner’s equity which can be measured in monetary terms.

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

  Assets = Liabilities + Owners' EquityAssets = Liabilities+{(Owners' investments)+(Owners' 

3.

To determine

Prepare a trial balance as of June 30, 20--.

4.

To determine

Prepare an income statement for the month ended June 30, 20--.

5.

To determine

Prepare a statement of owner’s equity for the month ended June 30, 20--.

6.

To determine

Prepare a balance sheet at June 30, 20--.

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