Question: (Using debits and credits) Ken Cascioli and Bill Ryder, master painters and paperhangers, formed a partnership. They had the following transactions during their first month of business. Record the debits and credits, without making explanations.
1. Ken and Bill each invested $3,000 in the business. (Note: Use separate capital accounts for each.)
2. Ken and Bill acquired the following items of equipment for use in the business:
a. Ladders and other equipment, for which they paid $1,800 in cash. They estimated that the equipment would have an average useful life of 6 years.
b. A pickup truck, which they bought for $10,000. They paid $2,000 in cash as a down payment and signed a note for the remainder, agreeing to pay $1,000 a month for the next 8 months, together with interest at the rate of 5 percent per annum on the unpaid balance of the loan. They estimated the truck would have a useful life of 4 years.
3. They took out a 3-year insurance policy related to their business activities, paying $1,200 cash.
4. They paid $380 for paint and other supplies, all of which was consumed on the various painting jobs they did during the month.
5. They paid $80 for gasoline for the pickup truck.
6. Ken and Bill expect payment from their customers every Friday for work done during the week. During the month they collected $9,380 in cash for their work.