Purchase Solution

Transaction analysis and financial statements

Not what you're looking for?

Ask Custom Question

The two entrepreneurs plan to rent bicycles and in-line skates to week-
End visitors to the lakefront. The following transactions occurred during
The first month of operations:

May 1 received contribution of 9,000 from each of the two principal owners
of the new business in exchange for shares of stock.

May 1 Purchased ten bicycles for $300 each on an open account. The company
has 30 days to pay for the bicycles.

May 9 Purchased 20 pair of in-line skates at $125 per pair, 20 helmets at 50 each.
And 20 set of protective gear (knee and elbow pads and wrist guards) at $45 per
Set for cash.

May 10 Purchased $100 in miscellaneous supplies on account. The company has
30 days to pay for the supplies.

May 15 Paid $125 bill from local radio station for advertising for the last two
Week of may.

May 17 Customers rented in-line skates and bicycles for cash of $ 1,800.

May 24 Billed the local park district 1,200 for in line skating lessons provided to
Neighborhood children.The park district is to pay one-half of the bill within five
Working days and the rest within 30 days.

May 29 Received 50% of the amount billed to the park district.
May 30 customers rented in-line skates and bicycles for cash of $3,000.
May 30 paid wages of 4160 to a friend who helped over the weekend.
May 31 paid the balance due on the bicycles.

Required
1. prepare a table to summarize the preceding transactions as they affect the accounting equation. Use the format in Exhibit 3-1.Identify each transaction
with the date.

Exhibit 3-1 example
Trans accounts accounts notes capital retained
No. cash receivable equipment building land payable payable stock earnings
1 10,000 10,000
2.Prepare an income statement month ended May 31, 2010
3. prepare a classified balance sheet at may 31,2010.

Purchase this Solution
Solution Summary

Your transactions are posted to an expanded accounting equation in Excel and then the financial statements are linked to the amounts in the accounting equation so you can see how the amounts are connected. A comment is made about one expense that is missing (depreciation) and why. Click on cells to see the links.

Solution Preview

Your transactions are posted to an expanded accounting equation in Excel and ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

View More Free Quizzes
Related BrainMass Solutions

  • D.C. Dawg started a business, Cats and Dogs Company: Show how each action impacts the accounting equation

    Give one additional piece of information related to the transaction that could be recorded in an information system for a purpose other than the financial statements. Prepare the four basic financial statements for the month of March.

  • Financial objectives, accounts, transactions, related issues

    Financial statements are prepared for external users and through the financial statements, the external users are able to determine the financial health of our company. 2 - An account is where certain transactions are recorded respective to that account

  • Using Financial Analysis to Assess and Improve Business Performance

    Common size statements: This is also knows as vertical analysis of the financial statements of the company.

  • International Finance

    Where are these gains or losses reported in the financial statements? Foreign currency transaction gains or losses are recognized at each balance sheet date and on the day that the transaction is settled.

  • Accounting Cycle

    Preparation of financial statements: Financial statements such as income statement, balance sheet and cash flow statements, and retained earnings are prepared at this stage. Income statements are prepared from revenues, expenses, gains and losses.

  • Entries for the Buyer & Seller; the Relationship of the Accounts

    What is the danger in focusing a financial analysis solely on the data found in the historical financial statements? Financial statements are statements that show the financial position of a firm at a specific period.

  • Purpose, interrelated, users, stakeholders, accounting cycle

    Statement of Cash Flows These four financial statements are the final product of the accountant's analysis of the transactions of a business. A large amount of effort goes into the preparation of the financial statements.

  • Accounting terms or theories

    Hence accounting cycle starts from recording of transaction then preparation of financial statements. This involves preparing accounting entries for each transaction and goes through closing the books.

  • Difference in direct and indirect transaction

    In the indirect intercompany transaction, the affiliate companies should make their own financial statements before they are incorporated in the main consolidated financial statement.

  • Financial Statements

    The solution explains how to record the transactions and prepare the financial statements

View More Related Solutions