Answer:
Part-I: Recording Business Transactions
JJ-Attorney is a sole proprietorship owned and operated by John Jameson. On July 1, 2013, JJAttorney has the following assets and liabilities: cash, $1,000; accounts receivable, $3,200; supplies, $850; land, $10,000; accounts payable, $1,530. Office space and office equipment are currently being rented, pending the construction of an office complex on land purchased last year. Business transactions during July are summarized as follows:
Received cash from clients for services, $3,928.
Paid creditors on account, $1,055.
Received cash from John Jameson as an additional investment, $3,700.
Paid office rent for the month, $1,200.
Charged clients for legal services on account, $2,025.
Purchased office supplies on account, $245.
Received cash from clients on account, $3,000.
Received invoice for paralegal services from client for July (to be paid on Aug 10), $1,635.
Paid the following expenses: wages expense, $850; answering service expense, $250; utilities expense, $325; and miscellaneous expense, $75.
Determined that the cost of office supplies on hand was $980; therefore, the cost of supplies used during the month was $115.
k. Jameson withdrew $1,000 in cash from the business for personal use.
Instructions
Determine the amount of owner’s equity (John Jameson’s capital) as of July 1, 2013.
State the assets, liabilities, and owner’s equity as of July 1 in equation form similar to that shown in this chapter. In tabular form below the equation, indicate the in-creases and decreases resulting from each transaction and the new balances after each transaction.
Prepare an income statement for July, a statement of owner’s equity for July, and a balance sheet as of July 31, 2013 and a statement of cash flows for July.
Part-II: Discussion Parts
What is the objective of most businesses?
What is the difference between a manufacturing business and a service business? Is a restaurant a manufacturing business, a service business, or both?
Who are normally included as the stakeholders of a business?
What is the role of accounting in business?
Land with an assessed value of $250,000 for property tax purposes is acquired by a business for $375,000. Seven years later, the plot of land has an assessed value of $400,000 and the business receives an offer of $725,000 for it. Should the monetary amount assigned to the land in the business records now be increased?
Assuming that the land acquired in (5) was sold for $725,000, how would the various elements of the accounting equation is affected?
A business had revenues of $420,000 and operating expenses of $565,000. Did the business (a) incur a net loss or (b) realize net income?
A business had revenues of $919,500 and operating expenses of $738,600. Did the business (a) incur a net loss or (b) realize net income?
What particular item of financial or operating data appears on both the income statement and the statement of owner’s equity?
What item appears on both the balance sheet and the statement of owner’s equity? 11. What item appears on both the balance sheet and the statement of cash flows?