Question -
John Chan started Chan Consulting and completed the following transactions during its first year of operation.
a. John invested $60,000 cash and office equipment valued at $30,000 into the business.
b. The company purchased a $300,000 building to use as an office. John paid $50,000 in cash and signed a note payable promising to pay the $250,000 balance over the next ten years.
c. The company purchased office equipment for $6,000 cash.
d. The company purchased $4,000 of office supplies and $1,000 of office equipment on credit.
e. The company paid a local newspaper $1,000 cash for printing an announcement of the office's opening.
f. The company completed a financial plan for a client and billed that client $4,000 for the service.
g. The company designed a financial plan for another client and immediately collected an $8,000 cash fee.
h. John withdrew $1,800 cash from the company to go on a holiday with his wife.
i. The company received $3,000 cash as partial payment from the client described in transaction (0.
j. The company made a partial payment of $500 cash for the office equipment purchased in transaction (d).
k. The company paid $2,500 cash for office wages for this period.
Required:
1. Create a Summary of Transactions similar to Exhibit 1.7, using the following headings for the columns: Cash; Accounts Receivable; Office Supplies; Office Equipment; Building; Accounts Payable; Notes Payable; J. Chan, Capital; J. Chan, Withdrawals; Revenues and Expenses.
2. Use additions and subtractions within the table created above to show the dollar effects of each of the above transactions on individual items of the accounting equation. Show new balances after each transaction.
3. Determine the company's net profit.
Attachment:- Exhibit.rar