Problem 1:
Rosa Partidge started The Creative Frames Shop. The owner:
a. Deposited 21,00 to strat business
b. paid current months rent $1,500
c. purchased store equipment on credit 10.800
d. purchased framing supplies 5,100
e. received framing revenue 2,400
f. billed customers for service 2,100
g. paid utltites expense 750
h. received payment from customers transaction (f) 600
i. made payment on store equipment purchased in (c) 5,400
j. withdrew cash for personal use 1,200
I must arrange the asset, liability, and ownwer's equity accounts in an equation , using these accounts titles: Cash, accounts payable, accounts receivable, framing supplies, store equipment, and Rosa Partidge, Capital. Then I must show addition and subtraction signs and the new balances after each transaction, and identifiy each owners equity transactions and type. Last I 'm supposed to contrast the effects on the cash flows of transactions (c) and (i) with transactions (d) and of (f) and (h) with transaction (e). Wow!
Problem 2: Ellis Plumbing Company, in the month of March, had the following transactions:
Cash 58,600 Tools 7,600 Delivery Truck 38,000
Accounts receivable 10,800 Accounts payable 8,600
In addition these transactions affected the owner's equity:
original investment by J. Ellis 40,000
withdrawal by J Ellis 4,000
further investment by J. Ellis 60,000
contract revenue 23,200
repair revenue 5,600
salaries expense 16,600
rent expense 1,400
fuel expense 400
I must arrange an income statement, owners equity, and a balance sheet for Ellis Plumbing company. (final balance is $106,400). I must identify the links among the financial statements in part 1.
Answer these questions:
1.) Which financial statement is most closely associated with the goal of liquidity?
2.) Which with the goal of profitability? Explain answer.
3.) What other statement is helpful in evaluating liquidity?