Problem - Carl Redmon completed these transactions during the first half of December:
Dec. 2 Invested $10,000 to start a consulting practice titled Redmon Consulting.
Dec. 2 Paid monthly office rent, $500
Dec. 3 Paid cash for a Dell computer, $2,000. This equipment is expected to remain in service for five years.
Dec. 4 Purchased office furniture on account, $3,600. The furniture should last for five years
Dec. 5 Purchased supplies on account, $300.00
Dec. 9 Performed consulting service for a client on account, $1,700.
Dec. 12 Paid utility expense, $200.
Dec. 18 Performed services for a client and received cash of $800.
Requirements -
1. Analyze the effects of Redmon's transactions on the accounting equation. Use the format of Exhibit 1-7, page 18, and include these headings: Cash, Accounts Receivable, Supplies, Equipment, Furniture, Accounts Payable, and Carl Redmon, Capital.
2. Prepare the income statement of Redmon Consulting for the month ended December 31, 2007. List expenses in decreasing order by amount.
3. Prepare the statement of owner's equity for the month ended December 31, 2007.
4. Prepare the balance sheet at December 31, 2007.