Like most business owners in their first year, Dr. Rooney does not know how to create her financial statements. She hires you as her accountant to put together her financial statement and file her tax return. Here is the information Dr Rooney recounts to you at year end:
1. I started my business with $10,000 cash. The $10,000 cash came from $5,000 loan from my sister and $5,000 from my personal checking account on January 1 st .
2. I paid $50 to obtain my business license on January 21 st .
3. I made house calls and charged $500 per house call. I made 50 house calls this year.
4. I had traveling expenses of $200 a month
5. I paid $10 for business phone calls each month.
6. On December 1 st , I paid $3,600 for insurance. The insurance covers January 1st to December 31st of the coming year.
7. On November 1st., I paid $2,400 for a one page ad for 12 months.
8. I got tired of doing all the paper work and answering phone calls, so I hired an office assistant on November 1st , I pay her $800 each month. I still owe her December’s salary.
9. Mr. Best Customer paid me $5,000 on December 1st for 10 months for checkup of his German Shepherd.
10. I also sell dog food. I purchased 20 boxes at $10 a box on December 1st . The vendor insists I pay cash for these transactions.
11. On December 5th , Mr. Best Customer bought 5 boxes of dog food at $15 a box. I only collect cash for sale of my inventory. (Hint: each box cost $10 – see #10)
12. On November 31st, I bought $500 worth of supplies on account.
13. On December 31st 2014, my admin assistant took closing inventory and found we only had $400 worth of supplies left.
Instructions: Record the above transactions into an accounting equation by creating a table.