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Exercise 1

Ray Neal invests $15,000 to start a computer programming business called Softbyte. Throughout the month, Softbyte purchases equipment, supplies, provides programming services to customers, and pays expenses. By the end of the month, Softbyte has $4,500 in cash, $1,600 in accounts receivable, $1,600 in supplies, $7,000 in equipment, and $250 in accounts payable.

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115 views3 pages

Exercise 1

Ray Neal invests $15,000 to start a computer programming business called Softbyte. Throughout the month, Softbyte purchases equipment, supplies, provides programming services to customers, and pays expenses. By the end of the month, Softbyte has $4,500 in cash, $1,600 in accounts receivable, $1,600 in supplies, $7,000 in equipment, and $250 in accounts payable.

Uploaded by

Nor nim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Exercise

Transaction (1): Ray Neal decides to open a computer programming service which he names Softbyte. On September 1, 2023, Ray Neal invests $15,000 cash
in the business.
Transaction (2): Purchase of Equipment for Cash. Softbyte purchases computer equipment for $7,000 cash.

Transaction (3): Softbyte purchases for $1,600 from Acme Supply Company computer paper and other supplies expected to last several months. The
purchase is made on account.

Transaction (4): Softbyte receives $1,200 cash from customers for programming services it has provided.

Transaction (5): Softbyte receives a bill for $250 from the Daily News for advertising but postpones payment until a later date.

Transaction (6): Softbyte provides $3,500 of programming services for customers. The company receives cash of $1,500 from customers, and it bills the
balance of $2,000 on account.

Transaction (7): Softbyte pays the following expenses in cash for September: store rent $600, salaries of employees $900, and utilities $200.

Transaction (8): Softbyte pays its $250 Daily News bill in cash.

Transaction (9): Softbyte receives $600 in cash from customers who had been billed for services [in Transaction (6)].

Transaction (10): Ray Neal withdraws $1,300 in cash from the business for his personal use

Instructions

a) Prepare a tabular analysis of the transactions using the following column headings: Cash, Accounts Receivable, Supplies, Equipment, Accounts
Payable, Common Stock, and Retained Earnings (with separate columns for Revenues, Expenses, and Dividends).

b) From an analysis Prepare financial statement for the month of September 30, 2015
Answer
Assets = Liability + Stockholder's Equity

Account Account Owner's Retained Earnings


Receivable Payable Capital Owner's - Revenue - Expense
Transaction Cash + + Supplies + Equipment = + + Drawing Explanation
+ + + = + + - -

+ + + = + + - -

+ + + = + + - -

+ + + = + + - -

+ + + = + + - -

+ + + = + + - -

+ + + = + + - -

+ + + = + + - -

+ + + = + + - -

+ + + = + + - -

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