Eshetu Gelagay Ind Ass Acc - For Managers
Eshetu Gelagay Ind Ass Acc - For Managers
Eshetu Gelagay Ind Ass Acc - For Managers
INDIVIDUAL ASSIGNMENT
ON
ACCOUNTING FOR MANAGER
BY: ESHETU GELAGAY
ID NO:-
SUBMITTED TO:-
NOV/2023
ALIANCE COLLEGE
INDIVIDUAL ASSIGNMENT
ON
CHAPTER ONE
ANSWER
Q.1
1. Determine the amount of owner’s equity (Cecil Jameson’s capital) as of July 1, 2009.
equity = assets - liabilities = $15,050 - $1,530 = $13,520
2. State the assets, liabilities, and owner’s equity as of July 1 in equation form similar to that shown in
this chapter. In tabular form below the equation, indicate the increases and decreases resulting
from each transaction and the new balances after each transaction.
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3. Prepare an income statement for July, a statement of owner’s equity for July, and a balance sheet as of July
31, 2009.
Balance Sheet
For the month ended July 31, 2007
Assets:
Cash $6,873
Accounts receivables $2,225
Supplies $980
Land $10,000
Total assets $20,078
Liabilities:
Accounts payable $720
Paralegal fees payable $1,635
Total liabilities $2,355
Equity:
Jameson, Cecil, capital $18,723
Jameson, Cecil, drawings -$1,000
Total equity $17,723
Liabilities + Equity = $20,078
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Cecil Jameson, Attorney - at-Law
Statement of Owner’s Equity
For the month ended July 31, 2007
Jameson, Cecil, capital balance July 1, 2009 $13,520
Investment during the month $3,700
Net income $1,503
Subtotal $18,723
Drawings ($1,000)
Jameson, Cecil, capital balance July 31, 2007 $17,723
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Q.2
Instructions
1. Indicate the effect of each transaction and the balances after each transaction
1. Liabilities - are the rights of creditors to the assets of the business. These are accounts that need to be
paid by the company.
2. Owner’s Equity or Capital - are the rights of the owners to the assets of the business. Items such as net
income/net loss, withdrawals, and investments affect the capital.
Hence, assets have a directly proportional relationship with liabilities and owner’s equity. While
liabilities and owner’s equity have an inversely proportional relationship with each other.
Step 3
Business Transactions
These are transactions that the company engages in during the operation of the business. Business
transaction changes the financial condition of the company and affects the results of its operation.
The effects of a business transaction are seen through changes in the accounting equation.
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Step 4
Requirement 1.
Transaction a.
The owner of the business invested $25,000 to the business.
Therefore, the effects of the transaction are:
Transaction b.
The company paid rent of $3,200 for office and equipment.
Step 6
Transaction c.
The company paid $1,200 for automobile expenses and $800 for miscellaneous expense for a total of $2,000.
Step 7
Transaction d.
The company bought $900 of supplies on account.
Therefore, the effects of the transaction are:
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Assets = Liabilities + Equity
Supplies Accts. Payable
d. + 900 + 900
Step 8
Transaction e.
The company collected $24,000 cash from customers.
e. +24,000 +24,000
Step 9
Transaction f.
f. - 400 - 400
Step 10
Transaction g.
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Step 11
Transaction h.
The owner of the business withdrew $3,000 cash.
Step 12
Transaction i.
The used portion of $750 of supplies is expensed.
Step 13
In summary, the effects of each transaction and the balances after each transaction are presented below:
Step 14
Financial Statements
The summary of the recorded transactions for the period is presented in the financial statements.
The four basic types of financial statements are:
1. Income Statement
2. Statement of Owner's Equity
3. Balance Sheet
4. Statement of Cash Flows
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Step 15
Requirement 2.
Income Statement
This financial statement reflects the balances of the revenues and expenses at the end of the period.
Revenue
This item represents items that are earned by the company through the selling of goods or services to
customers.
Expenses
This item represents items that are paid by the company to operate the business.
The basic formula for the income statement is:
Revenue−Expense
Step 16
Therefore, using the balances of the accounts presented in the summary of the effects of the transactions, the
income statement is presented below:
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Coyote Realty
Income Statement
For the Year Ended April 30, 2010
Operating Revenue
Sales commission$ 24,000
Total Revenue 24,000
Operating Expenses
Office sal. Expense $ 3,600
Rent expense 3,200
Auto expense 1,200
Supplies expense 750
Misc. expense 800
Total Expense 9,550
Net Income$ 14,450
The net income of the company for the year ended April 30, 2010, is $14,450.
This financial statement presents the changes in the capital, including net income/net loss, investments, and
withdrawals made by the owner.
The operations of the company may result in a net income or net loss.
Net Income occurs when the revenue is greater than the expenses.
Net Loss occurs when the expenses are greater than the revenue.
Investments
These are contributions made by the owner of the business, therefore, increasing the capital.
Withdrawals
This represents withdrawals of resources by the owner, therefore, decreasing the capital.
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Step 18
The net income was computed in the income statement. Therefore, the statement of owner's equity is
presented below:
Coyote Realty
Statement of Owner’s Equity
For the Year Ended April 30, 2010
Capital, beg.$ 25,000
Add: Net income 14,450
Less: Withdrawal (3,000)
Capital, April 30/2010 $ 36,450
Step 19
Balance Sheet
Is a financial statement that presents the assets, liabilities, and capital of the company for a specific period of
time.
Assets
These are resources owned by the business including cash, equipment, copyright, land, and buildings.
Liabilities
Capital
This represents the rights of the owner to the assets of the company.
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Step 20
Coyote Realty
Balance sheet
April 30, 2010
ASSETS:
Cash$ 36,800
Supplies 150
Total Assets $ 36,950
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