Homework SourseIn 2006 you joined a group of 20 Richland College graduates
In 2006 you joined a group of 20 Richland College graduates to start a company that provides innovative tutoring and educational services You are responsible for all accounting activities. After applying to the Secretary of State in Austin, Shannon’s Tutoring Corporation (STC) received its corporate charter and began business as a Texas Corporation on December 1, 2006. During the first month of business the following Transactions occurred. You must analyze each transaction’s effect on the Accounting Equation and Prepare the Income Statement, Statement of Retained Earnings and the Balance Sheet for the Year ended 12/31/2006.
12/01/06
STC began business by investing $50,000 in exchange for 10,000 shares of Common Stock.
12/1/06
STC Paid $12,000 for 1 year of rent for the 12 month period beginning December 1, 2006 through November 30, 2007. (Hint: Prepaying rent in advance creates an Asset called Prepaid Rent )
12/1/06
STC received $18,000 cash in advance from the Texas School System and signed a contract to provide monthly tutoring services to students from December 2006 through May of 2007.
12/02/06
STC purchased a Computer System for $35,000 cash.
12/09/06
STC earned & received $1,000 in cash by providing tutoring services.
12/12/06
STC Billed the RISD $2,500 for tutoring services performed at their school. Payment has not been received.
12/12/06
STC Purchased $500 of Supplies on Account.
12/21/06
STC Paid $400 Wages to employees.
12/23/06
STC Received $1,500 Cash from RISD for services billed on 12/12/06(#6).
12/29/06
STC Paid a $300 Utility Bill.
| 12/01/06 | STC began business by investing $50,000 in exchange for 10,000 shares of Common Stock. | |
| 12/1/06 | STC Paid $12,000 for 1 year of rent for the 12 month period beginning December 1, 2006 through November 30, 2007. (Hint: Prepaying rent in advance creates an Asset called Prepaid Rent ) | |
| 12/1/06 | STC received $18,000 cash in advance from the Texas School System and signed a contract to provide monthly tutoring services to students from December 2006 through May of 2007. | |
| 12/02/06 | STC purchased a Computer System for $35,000 cash. | |
| 12/09/06 | STC earned & received $1,000 in cash by providing tutoring services. | |
| 12/12/06 | STC Billed the RISD $2,500 for tutoring services performed at their school. Payment has not been received. | |
| 12/12/06 | STC Purchased $500 of Supplies on Account. | |
| 12/21/06 | STC Paid $400 Wages to employees. | |
| 12/23/06 | STC Received $1,500 Cash from RISD for services billed on 12/12/06(#6). | |
| 12/29/06 | STC Paid a $300 Utility Bill. |
Solution
Answer
Accounting Equation: Total Assets = Capital/Equity + Liabilities
Note: After every transaction, A column = B column
Date
Tran saction no
Total Assets
=
Equity
+
Liabilities
TOTAL (B)
Cash
Fixed Assets
Supplies
Accounts Receivables
Prepaid Rent
TOTAL(A)
=
Common Stock
+
Advance from Customer
12-01-2006
1
50000
50000
=
50000
+
50000
TOTAL
50000
50000
=
50000
+
50000
12-01-2006
2
-12000
11000
-1000
=
-1000
+
-1000
TOTAL
38000
11000
49000
=
49000
+
49000
12-01-2006
3
18000
18000
=
3000
+
15000
18000
TOTAL
56000
11000
67000
=
52000
+
15000
67000
12-02-2006
4
-35000
35000
0
=
+
0
TOTAL
21000
35000
11000
67000
=
52000
+
15000
67000
12-09-2006
5
1000
1000
=
1000
+
1000
TOTAL
22000
35000
11000
68000
=
53000
+
15000
68000
12-12-2006
6
2500
2500
=
2500
+
2500
TOTAL
22000
35000
2500
11000
70500
=
55500
+
15000
70500
12-12-2006
7
-500
500
0
=
+
0
TOTAL
21500
35000
500
2500
11000
70500
=
55500
+
15000
70500
12/21/06
8
-400
-400
=
-400
+
-400
TOTAL
21100
35000
500
2500
11000
70100
=
55100
+
15000
70100
12/23/06
9
1500
-1500
0
=
+
0
TOTAL
22600
35000
500
1000
11000
70100
=
55100
+
15000
70100
12/29/06
10
-300
-300
=
-300
+
-300
TOTAL
22300
35000
500
1000
11000
69800
=
54800
+
15000
69800
Income Statement
Revenues
Transaction no
Amount
3
3000
5
1000
6
2500
Total Revenues
6500
Expenses
Rent expense
1000
Wages expenses
400
Utility Bill
300
Total Expenses
1700
Net Income
4800
Statement of Retained Earning
Opening Balance
0
Add: Net Income
4800
Closing Balance
4800
Balance Sheet
A. Equity
Common Stock
50000
Retained Earnings
4800
Total
54800
B. Liabilities
Advance from Customer
15000
Total Equity & Liabilities
69800
C. Assets
Cash
22300
Fixed Assets
35000
Supplies
500
Accounts Receivables
1000
Prepaid Rent
11000
Total Assets
69800
| Date | Tran saction no | Total Assets | = | Equity | + | Liabilities | TOTAL (B) | |||||
| Cash | Fixed Assets | Supplies | Accounts Receivables | Prepaid Rent | TOTAL(A) | = | Common Stock | + | Advance from Customer | |||
| 12-01-2006 | 1 | 50000 | 50000 | = | 50000 | + | 50000 | |||||
| TOTAL | 50000 | 50000 | = | 50000 | + | 50000 | ||||||
| 12-01-2006 | 2 | -12000 | 11000 | -1000 | = | -1000 | + | -1000 | ||||
| TOTAL | 38000 | 11000 | 49000 | = | 49000 | + | 49000 | |||||
| 12-01-2006 | 3 | 18000 | 18000 | = | 3000 | + | 15000 | 18000 | ||||
| TOTAL | 56000 | 11000 | 67000 | = | 52000 | + | 15000 | 67000 | ||||
| 12-02-2006 | 4 | -35000 | 35000 | 0 | = | + | 0 | |||||
| TOTAL | 21000 | 35000 | 11000 | 67000 | = | 52000 | + | 15000 | 67000 | |||
| 12-09-2006 | 5 | 1000 | 1000 | = | 1000 | + | 1000 | |||||
| TOTAL | 22000 | 35000 | 11000 | 68000 | = | 53000 | + | 15000 | 68000 | |||
| 12-12-2006 | 6 | 2500 | 2500 | = | 2500 | + | 2500 | |||||
| TOTAL | 22000 | 35000 | 2500 | 11000 | 70500 | = | 55500 | + | 15000 | 70500 | ||
| 12-12-2006 | 7 | -500 | 500 | 0 | = | + | 0 | |||||
| TOTAL | 21500 | 35000 | 500 | 2500 | 11000 | 70500 | = | 55500 | + | 15000 | 70500 | |
| 12/21/06 | 8 | -400 | -400 | = | -400 | + | -400 | |||||
| TOTAL | 21100 | 35000 | 500 | 2500 | 11000 | 70100 | = | 55100 | + | 15000 | 70100 | |
| 12/23/06 | 9 | 1500 | -1500 | 0 | = | + | 0 | |||||
| TOTAL | 22600 | 35000 | 500 | 1000 | 11000 | 70100 | = | 55100 | + | 15000 | 70100 | |
| 12/29/06 | 10 | -300 | -300 | = | -300 | + | -300 | |||||
| TOTAL | 22300 | 35000 | 500 | 1000 | 11000 | 69800 | = | 54800 | + | 15000 | 69800 |
