Question

Hi, please help me create a LEDGER, a TRIAL BALANCE, a STATEMENT OF PERFORMANCE, a STATEMENT OF EQUITY, and a STATEMENT OF FINANCIAL POSITION to the following problem;

On March 1 of the current year, Jenjen Bella established a business under the name Bella Employment Agency. Transactions completed during the month were as follows;
March 1 - Opened a business bank account with a cash deposit of $500,000.
March 2 - Invested land and building worth $100,000 and $400,000 respectively.
March 5 - Purchased equipment worth $12,000 paying cash f $5,000 and the balance on the account.
March 7 - Purchased supplies for cash, $2,500.
March 15 - Commission collected $6,500.
March 18 - Paid creditor on account, $3,000
March 20 - Paid property taxes, $5,000.
March 22 - Withdrew cash from the business account for personal use, $3,000.
March 30 - Commission not yet collected, $4,500.
March 31 - Supplies inventory count showed unused supplies of $2,000. Cash paid for salary, $4,200 and utility $3,500. Depreciation: Building, $4,000 and Equipment, $240

Answer 1

To create the requested financial statements, we need to first prepare a Ledger to record all the transactions. Then, we can proceed to prepare the financial statements such as the Trial Balance, Statement of Performance, Statement of Equity, and Statement of Financial Position.

Step-by-step explanation:

To create the requested financial statements, we need to first prepare a Ledger to record all the transactions. Here is a summary of the Ledger:

March 1: Debit Cash $500,000, Credit Capital $500,000

March 2: Debit Land $100,000, Debit Building $400,000, Credit Capital $500,000

March 5: Debit Equipment $12,000, Credit Cash $5,000, Credit Accounts Payable $7,000

March 7: Debit Supplies $2,500, Credit Cash $2,500

March 15: Debit Cash $6,500, Credit Commission Revenue $6,500

March 18: Debit Accounts Payable $3,000, Credit Cash $3,000

March 20: Debit Property Taxes Expense $5,000, Credit Cash $5,000

March 22: Debit Withdrawals $3,000, Credit Cash $3,000

March 30: Debit Accounts Receivable $4,500, Credit Commission Revenue $4,500

March 31: Debit Supplies Expense $2,500, Credit Supplies $2,500

Debit Salary Expense $4,200, Debit Utility Expense $3,500, Debit Depreciation Expense-Building $4,000, Debit Depreciation Expense-Equipment $240, Credit Cash $7,700

With the Ledger completed, we can proceed to prepare the financial statements.

The Trial Balance is a summary of all the ledger account balances. It shows that the debits equal the credits, providing a check for mathematical accuracy. Here is the Trial Balance:

Accounts: Debit Credit

Cash $8,300

Land $100,000

Building $400,000

Equipment $5,760

Supplies $500

Accounts Receivable $9,500

Accounts Payable $4,000

Commission Revenue $11,000

Property Taxes Expense $5,000

Withdrawals $-3,000

Supplies Expense $2,500

Salary Expense $4,200

Utility Expense $3,500

Depreciation Expense-Building $4,000

Depreciation Expense-Equipment $240

Totals: $536,800 $536,800

The Statement of Performance shows the revenue and expense accounts and calculates the net income. Here is the Statement of Performance for March:

Revenue:
Commission Revenue $11,000

Expenses:
Property Taxes Expense $5,000
Supplies Expense $2,500
Salary Expense $4,200
Utility Expense $3,500
Depreciation Expense-Building $4,000
Depreciation Expense-Equipment $240

Net Income: $-4,440

The Statement of Equity shows the changes in the owner's capital account during the month. Here is the Statement of Equity for March:

Beginning Capital: $500,000

Net Income: $-4,440

Withdrawals: $3,000

Ending Capital: $492,560

The Statement of Financial Position (also known as the Balance Sheet) shows the assets, liabilities, and owner's equity at the end of the month. Here is the Statement of Financial Position for March:

Assets:
Cash $8,300
Land $100,000
Building $400,000
Equipment $5,760
Supplies $500
Accounts Receivable $9,500

Total Assets: $523,060

Liabilities:
Accounts Payable $4,000

Total Liabilities: $4,000

Owner's Equity:
Capital $492,560

Total Liabilities and Owner's Equity: $523,060