Bumpers Body Shop began business as a corporation in 2010 Se

Bumper\'s Body Shop began business as a corporation in 2010. Several transactions which occurred early in 2010 are described below January 21, 2010-stockholders invested cash of $25,000 in the business and received 2,500 shares of $10 par value common stock as evidence of their ownership interest. February 1, 2010-rent of $800 was paid for the month of February. February 5, 2010-equipment with a cost of $1,400 was purchased on credit; payment is due within 30 days. February 10, 2010-bills totaling $3,200 were presented to customers for body work and painting services completed $1,700 was received in cash immediately; the balance of $1,500 is due within 10 days. February 18, 2010-payment of $1,400 was made for the equipment purchased on February 5 February 20, 2010-payment of $900 was received from customers with balances due from February 10. February 28, 2010-employee salaries of $1,600 were paid. February 28, 2010-declared and paid a dividend of $100 Use the format presented below to indicate the effects of each transaction on the accounting equation. Enter the amount by which an account increases or decreases in the column provided for that account. Use 0 to indicate decreases. Prepare an Income Statement, Statement of Retained Earnings, Balance Sheet and a Statement of Cash = Liabilities + Owners\' Equity + Revenue-Expenses Cash + AR + Equipment = AP + Stock + Retained Earnings + Revenue-Expenses

Solution

Answer

Asset = Liabilities + Stockholders’ Equity.

Every transaction will follow accounting equation and that accounting equation will always match.

Assets

=

Liabilities

+

Owners\' Equity

+

Revenue

-

Expenses

Date

Cash

+

A/R

+

Equipment

=

A/P

+

Stock

+

Retained earnings

+

Jan 21, 2010

25000

+

+

=

+

25000

+

+

-

Feb 1, 2010

(800)

+

+

=

+

+

+

-

800

Feb 5, 2010

+

+

1400

=

1400

+

+

+

-

Feb 10, 2010

1700

+

1500

+

=

+

+

+

3200

-

Feb 18, 2010

91400)

+

+

=

(1400)

+

+

+

-

Feb 20, 2010

900

+

(900)

+

=

+

+

+

-

Feb 28, 2010

(1600)

+

+

=

+

+

+

-

1600

Feb 28, 2010

(100)

+

+

=

+

+

(100)

+

-

Assets

=

Liabilities

+

Owners\' Equity

+

Revenue

-

Expenses

Date

Cash

+

A/R

+

Equipment

=

A/P

+

Stock

+

Retained earnings

+

Jan 21, 2010

25000

+

+

=

+

25000

+

+

-

Feb 1, 2010

(800)

+

+

=

+

+

+

-

800

Feb 5, 2010

+

+

1400

=

1400

+

+

+

-

Feb 10, 2010

1700

+

1500

+

=

+

+

+

3200

-

Feb 18, 2010

91400)

+

+

=

(1400)

+

+

+

-

Feb 20, 2010

900

+

(900)

+

=

+

+

+

-

Feb 28, 2010

(1600)

+

+

=

+

+

+

-

1600

Feb 28, 2010

(100)

+

+

=

+

+

(100)

+

-