Second Hour Activity Question

Week 3

Second Hour Activity: Moodle: Week 3 Question (from Gaffikin 1996, question 2.28).
R.A. Bartlett, Registered Valuer, is a sole proprietorship providing commercial and industrial valuations and feasibility studies. On 1 January of the current year, the assets and liabilities of the business were the following: Cash, $3200; Accounts Receivable, $4800; Supplies on Hand, $600; and
Accounts Payable, $500. The following business transactions occurred during January.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Paid rent for three months, $900.
Received $2600 on customers’ accounts.
Paid $350 on accounts payable.
Received $1500 for services performed for cash customers.
Purchased $200 worth of supplies on account.
Billed the city for a feasibility study performed, $3200, and various other credit customers,
$4300.
Paid salary of assistant, $1500.
Paid telephone and electricity expense, $150.
Withdrew $800 cash for personal use of R.A. Bartlett.
Supplies on hand at the end of January amounted to $320.
Determined that rent expense for the month was $300 (see transaction 1.).

Required
a) From data in the first paragraph, prepare a balance sheet equation for R. A.
Bartlett, Registered Valuer, as at 1 January of the current year. Use the horizontal form and place the amounts on the first line of the form. The headings should be as follows: Cash, Accounts Receivable, Supplies on Hand, Prepaid Rent, Accounts
Payable, and Capital.
b) Following the form, show the effects of transactions 1 to 11 on the beginning balance sheet amounts, and total the columns to prove that assets equal liabilities plus owner’s equity as at 31 January.
c) Prepare an income statement for January.
d) Prepare a statement of owner’s equity for January.