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Accounting Equation, Financial Statements, Journal Entries

#1. Ramsey Corporation reported the following accounts and balances in its financial statements:
Cash \$35,000
Inventory \$10,200
Equipment \$19,500
Accounts Payable \$16,350
Contributed capital \$30,000
Retained earnings \$18,350

Arrange the accounts and balances into the accounting equation using the following equation and then answer the following questions.

Assets = liabilities + owners' equity

1. What is the total amount of assets?
2. What is the total amount of liabilites?
3. What is the total amount of owners' equity?

#2. After six months of operations, Right Way Lumber had the following revenues and expense balances:

Supplies expense \$11,000
Service revenue \$62,090
Utilities expense \$6,200
Rent expense \$14,700
Wages expense #13,330

Prepare an income statement in its proper format ending on June 30,2009. You should include the heading and left align it so the formatting is understandable.

#3. Jim Smith had trouble finding a job, so he decided to start his own sole proprietorship by the name of Designers Inc. Jim is a Web site designer, and here are the results as of the end of the first year of his business.

Accounts payable \$12,100
Cash \$19,150
Service revenue \$20,000
Contributed capital \$21,000
Wages expense \$4,100
Inventory \$4,445
Rent expense \$5,000
Equipment \$16,325
Supplies expense \$4,080
Retained earnings \$6,820

Prepare a balance sheet in proper format with the heading left aligned.

#4. Woodcross LLC had the following events occur during the month of July:
1. Received \$40,000 from investors for contributed capital
2. Borrowed %15,500 from the bank
3. Paid \$4,100 for rent
4. Made sales on account for \$12,500
5. Made cash sales to customers totaling \$29,700
6. Repaid part of bank loan for \$6,000
7. Purchased new equipment for \$5,000
8. Paid \$13,000 for wages
9. Paid \$1,900 for utilities

Prepare the nine journal entries using the following example so that the formatting will be clear:

Debit account #1 name \$xxx
Credit account #2 name \$xxx

No need to indent, include "debit" and "credit" for account name and amount for clarity.

Solution Preview

#1.

Assets = Liabilities + Owner's Equity
Cash \$35,000
Inventory 10,200
Equipment 19,500
Accounts Payable \$16,350
Contributed capital \$30,000
Retained earnings 18,350

Totals \$64,700 \$16,350 \$48,350

#2.

Right Way Lumber
Income Statement
For the Six Months Ended June 30, 2009

Service revenue ...

Solution Summary

#1. Ramsey Corporation reported the following accounts and balances in its financial statements:
Cash \$35,000
Inventory \$10,200
Equipment \$19,500
Accounts Payable \$16,350
Contributed capital \$30,000
Retained earnings \$18,350

Arrange the accounts and balances into the accounting equation using the following equation and then answer the following questions.

Assets = liabilities + owners' equity

1. What is the total amount of assets?
2. What is the total amount of liabilities?
3. What is the total amount of owners' equity?

#2. After six months of operations, Right Way Lumber had the following revenues and expense balances:

Supplies expense \$11,000
Service revenue \$62,090
Utilities expense \$6,200
Rent expense \$14,700
Wages expense #13,330

Prepare an income statement in its proper format ending on June 30,2009. You should include the heading and left align it so the formatting is understandable.

#3. Jim Smith had trouble finding a job, so he decided to start his own sole proprietorship by the name of Designers Inc. Jim is a Web site designer, and here are the results as of the end of the first year of his business.

Accounts payable \$12,100
Cash \$19,150
Service revenue \$20,000
Contributed capital \$21,000
Wages expense \$4,100
Inventory \$4,445
Rent expense \$5,000
Equipment \$16,325
Supplies expense \$4,080
Retained earnings \$6,820

Prepare a balance sheet in proper format with the heading left aligned.

#4. Woodcross LLC had the following events occur during the month of July:
1. Received \$40,000 from investors for contributed capital
2. Borrowed %15,500 from the bank
3. Paid \$4,100 for rent
4. Made sales on account for \$12,500
5. Made cash sales to customers totaling \$29,700
6. Repaid part of bank loan for \$6,000
7. Purchased new equipment for \$5,000
8. Paid \$13,000 for wages
9. Paid \$1,900 for utilities

Prepare the nine journal entries using the following example so that the formatting will be clear:

Debit account #1 name \$xxx
Credit account #2 name \$xxx

No need to indent, include "debit" and "credit" for account name and amount for clarity.

\$2.19