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BT 2

Joan invested $11,000 in her law practice, leading to increases in cash and owner's equity. Throughout July, she recorded various transactions including expenses, revenue from services, and equipment purchases, resulting in a net income of $1,800. The balance sheet at month-end shows total assets of $15,500, liabilities of $3,700, and owner's equity of $11,800.

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24 views4 pages

BT 2

Joan invested $11,000 in her law practice, leading to increases in cash and owner's equity. Throughout July, she recorded various transactions including expenses, revenue from services, and equipment purchases, resulting in a net income of $1,800. The balance sheet at month-end shows total assets of $15,500, liabilities of $3,700, and owner's equity of $11,800.

Uploaded by

dlinh71205
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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1.

Joan invested $11,000 in cash in the law practice


* Increase in cash : $11,000
* Increase in owner's equity: $11,000

2. Paid $800 July rent on office space


* Decrease in cash: $800
* Decrease in expense: $800

3. Purchased equipment on account $3,000


* Increase in equipment $3,000
* Increase in account payable $3,000

4. Provided legal services for clients and received cash for $1,500
* Increase in cash $1,500
* Increase revenue $1,500

5. Borrowed $700 cash from a bank on a note payable


* Increase in cash $700
* Increase in accounts payable $700

6. Performed legal services for client on account $2,000


* Increase in account receivable $2,000
* Increase in revenue $2,000

7. Paid monthly expenses: salaries and wages $500; utilities $300, and advertising $100
* decrease in expense $500
$300
$100

* decrease in cash $900

8. Joan withdrew $1,000 cash for personal use


* Decrease in cash $1,000
* Owner drawing $1,000

a) Prepare a tabular summary of the transactions


Assets = Liabilities
Transaction Cash + Account receivable + Suppliers + Equipment Accounts payable +
1 $11,000
2 ($800)
3 $3,000 $3,000
4 $1,500
5 $700 $700
6 $2,000
7 ($500)
($300)
($100)
8 ($1,000)
$15,500

b) Joan robinson, attorney Joan robinson, a


Income statement Owner's equity st
For the month ended July 31,2020 For the month ended
Revenue Owner's capital, July 1
Service revenue $3,500 Add:
Expense
Salaries and wages expense $500
Utilities expense $300 Less
Advertising expense $100 Owner's capital, July 31
Rent expense $800
Total expenses $1,700
Net income $1,800

Joan robinson, attorney


Balance sheet
For the month ended July 31,2020

Assets
Cash $10,500
Account receivables $2,000
Equipment $3,000
Total assets $15,500

Liabilities and owners's equity


Liabilities
Account payable $3,700
Total liabilites $3,700
Owner's equity
Owner's capital $11,800
Total L and Owner's equity $15,500
+ Owner's equity
Owner's capital - Owner drawing + Rev - Expense
$11,000
($800)

$1,500

$2,000
($500)
($300)
($100)
($1,000)
$15,500

Joan robinson, attorney


Owner's equity statement
For the month ended July 31,2020
$0
Investment $11,000
Net income $1,800
$12,800
Drawing $1,000
pital, July 31 $11,800

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