Cullen Beatty plans to start a consulting business—Cullen Consulting Services. In preparation to do this, on April 1, 2019, he invested $52,000 in cash and $21,000 in equipment, and opened an account at Office Plus by purchasing $1,700 in office supplies which is due by the end of the month. He then signed a one-year lease agreement on an office building for $6,400, paying the full amount in advance. Prepare a Balance Sheet for Cullen Consulting Services as of April 1, 2019, before he conducts any services.
the following is the balance sheet
.................................Cullen Consulting Services
...................................Balance sheet...............
...................................April 1,2019............
Assets | Liabilities | ||
Cash | $45,600 | Accounts payable | $1,700 |
supplies | $1,700 | ||
prepaid rent | $6,400 | Owner's equity | |
Equipment | $21,000 | Cullen beaty capital | $73,000 |
Total | $74,700 | $74,700 |
note:
cash balance = $52,000 intial investment - $6400 paid towards lease => $45,600.
since supplies are purchased on accout : account payable to the tune of $1700 will be created.
Since lease of one year is paid in advance, it results is creation of prepaid rent..
capital of cullen beatty = cash + equipment => $52,000 + 21,000 =>$73,000.
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