Question

Ming Chen began a professional practice on June 1 and plans to prepare financial statements at the end of each month. During June, Ming Chen (the owner) completed these transactions.Owner invested $61,000 cash in the company along with equipment that had a $22,000 market value in exchange for its common stock.The company paid $1,200 cash for rent of office space for the month.The company purchased $13,000 of additional equipment on credit (payment due within 30 days).The company completed work for a client and immediately collected the $2,300 cash earned.The company completed work for a client and sent a bill for $8,000 to be received within 30 days.The company purchased additional equipment for $6,200 cash.The company paid an assistant $2,400 cash as wages for the month.The company collected $4,300 cash as a partial payment for the amount owed by the client in transaction e.The company paid $13,000 cash to settle the liability created in transaction c.The company paid $1,200 cash in dividends to the owner (sole shareholder).Required:Enter the impact of each transaction on individual items of the accounting equation. (Enter decreases to account balances with a minus sign.)

Answer 1

Answer:

Please see below the computation for Assets = Liabilities + Equity.

Explanation:

(+) Cash $61,000

(-) Capital $61,000

(+) Equipment $22,000

(-) Common Stock $22,000

(+) Rent Expense $1,200

(-) Cash $1,200

(+) Equipment $13,000

(-) Accounts Payable $13,000

(+) Cash $2,300

(-) Services $2,300

(+) Accounts Receivables $8,000

(-) Services $8,000

(+) Equipment $6,200

(-) Cash $6,200

(+) Wages Expense $2,400

(-) Cash $2,400

(+) Cash $4,300

(-) Account Receivable $4,300

(+) Accounts Payable $13,000

(-) Cash $13,000

(+) Dividends $1,200

(-) Cash $1,200

Net Profit = Revenue - Expenses

Net Profit = $10,300 - $3,600

Net Profit = $6,700

Assets = Total Liabilities + Shareholders' Equity

Cash + Accounts Receivables + Equipment = Accounts Payable + Capital + Retained Earning + Common Stock - Dividends

$43,600 + $3,700 + $41,200 = $0 + $61,000 + $6,700 + 22,000 - $1,200

$88,500 = $88,500