Question

3. The following are transactions related to formation of ABC Services and its first month of operations. Record each transaction in the appropriate columns on the following, showing the amounts involving and indicate how each account is affected (+ or -). After the transactions have been recorded, calculate the total assets, liabilities, and stockholders’ equity at the end of the month and calculate the amount of net income for the month.

a. The firm was organized and the initial stockholders invested cash of $13,000.          b. The company borrowed $5,400 from a relative of one of the initial stockholders; a short-term note was signed.                    c. Equipment costing $4,800 was purchased for cash.                    d. Supplies were purchased for cash of $500.                   e. Advertising flyers announcing the formation of the business and a newspaper ad were purchased. The cost of these items, $850, will be paid in 30 days.                 f. Revenue of $3,500 was earned in the first two weeks of business; $2,300 was collected in cash, and the balance will be received within 30 days.                    g. Employees were paid $1,200 for their work during the first two weeks.                      h. Additional supplies costing $550 were purchased for cash.                         i. In the last two weeks of the first month, revenues totaled $4,600, of which $1,875 was collected.                     j. Employee wages for the last two weeks totaled $2,250; these will be paid during the first week of the next month.                 k. It was determined at the end of the month the cost of the supplies still on hand was $200.                      l. Customers paid a total of $750 due from services provided during the first two weeks. The revenue for these services was recognized in transactions f.

Answer 1

Answer with effects and amounts:

Answer with effects and amounts:

Answer with effects and amounts:

Answer with effects and amounts:

Net Income computation:

Assets amount:

Liabilities and stockholders equity: