Question

Johnson Waterworks Company provides plumbing services. The company is a sole proprietorship. Transactions during the first year of operations are provided below. a) The owner, Mitchell Johnson, contributed $ 12,000 cash in exchange for capital. b) Paid $ 1,000 for equipment to be used for plumbing repairs. c) Borrowed $ 11,000 from a local bank and deposited the money in the checking account. d) Paid $ 200 in rent for the year. e) Paid $ 300 for plumbing supplies to be used on various jobs next year. f) Completed a plumbing repair for a law firm and received $ 2,900. Calculate the amount of total assets at the end of the first year. Assume the plumbing supplies of $ 300 are left at the end of the year.

Answer 1

Given:

Contributed $12,000 cash in exchange for capital,

Paid $1,000 for equipment to be used for plumbing repairs,

Borrowed $11,000 from a local bank and deposited the money in the checking account,

Paid $200 in rent for the year,

Paid $300 for plumbing supplies to be used on various jobs next year,

Completed a plumbing repair for a law firm and received $2,900,

The plumbing supplies of $ 300 are left at the end of the year.

Total assets at the end of the first year = $25,700