Analyzing transactions on a work sheet:
Ted's Ambulette provides services to and from hospitals and nursing homes. Ted, who went into business recently, keeps records on a work sheet similar to that illustrated in the text.
At the start of the new year, his work sheet shows these balances: Cash-$30,000; Accounts receivable-$15,000; Fuel and parts inventory-$8,000; Vehicles-$192,000; Accounts payable-$12,000; Loans payable-$180,000; Ted Elias, Capital-$53,000. (You will also need columns for Investments, Prepaid rent, Prepaid insurance, and Withholding tax payable.) These transactions occurred in the first month of the new year:
1. Ted leased a garage to store his vehicles and to make minor repairs. He paid $6,000 for 2 months' rent.
2. Ted bought accident insurance for a 2-year period, paying $12,000.
3. He received $13,000 from charge-account customers he had billed last year.
4. During the month he purchased $10,000 of fuel and repair parts on credit.
5. He received $50,000 during the month from customers who paid in cash.
6. At month-end, he sent out bills for $14,000 to charge-account customers.
7. He paid $12,000 to suppliers from whom he had purchased on account.
8. Ted's drivers and other employees earned $30,000. He paid them $28,000 and withheld $2,000 in taxes, which he will pay the government next month.
9. On the 15th of the month, Ted invested some of his cash in a 6-month $20,000 Treasury note.
10. During the month, Ted used $6,000 in fuel and repair parts from inventory.
11. Ted paid utility bills amounting to $3,000. He also received a utility bill for $1,000 that he had not paid at month-end.
Record the opening balances on a work sheet similar to that illustrated in the text, and then analyze these transactions on the work sheet.