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Chapter 2: 40PGB_3 (page 112)

Question:Preparing financial statements from the trial balance and calculating the debt ratio

Preparing financial statements from the trial balance and calculating the debt ratio

Account Title Debit Credit

Office Supplies 1,400

Cash 32,000

Accounts Receivable 9,100

Prepaid Insurance 2,600

Equipment 24,000

Accounts Payable 3,400

Unearned Revenue 1,296

Notes Payable 34,000

Common Stock 20,000

Dividends 3,000

Salaries Expense 1,600

Rent Expense 700

Utilities Expense 100

Service Revenue 15,804

Total Balance \( 74,500 \) 74,500

Requirements Prepare the balance sheet as of July 31, 2018.

Short Answer

Expert verified

The balance sheet shows assets, liabilities and stockholders’ equity of the business and the total of balance sheet is $69,100

Step by step solution

01

Step-by-step SolutionStep 1: Definition of Balance Sheet

The balance sheet is defined as the financial statement which reports the financial position of the business

02

Preparation of Balance Sheet

Sheila Sanchez, Registered Dietician

Balance Sheet

July 31, 2018

Assets

Amount ($)

Liabilities

Amount ($)

Cash

$32,000

Accounts Payable

$3,400

Accounts Receivables

$9,100

Unearned Revenue

$1,296

Office Supplies

$1,400

Notes Payable

$34,000

Prepaid Insurance

$2,600

Equipment

$24,000

Stockholders’ Equity

Common stock

$20,000

Retained Earnings

$10,404

Total Assets

$69,100

Total Liabilities and stockholders’ Equity

$69,100

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Most popular questions from this chapter

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

Terrence Murphy opened a law office on January 1, 2018. During the first month of operations, the business completed the following transactions:

Jan. 1 Murphy contributed \(78,000 cash to the business, Terrence Murphy, Attorney. The business issued common stock to Murphy.

3 Purchased office supplies, \)600, and furniture, \(1,700, on account.

4 Performed legal services for a client and received \)1,000 cash.

7 Purchased a building with a market value of \(130,000, and land with a market value of \)25,000. The business paid \(25,000 cash and signed a note payable to the bank for the remaining amount.

11 Prepared legal documents for a client on account, \)400.

15 Paid assistant’s semimonthly salary, \(1,120.

16 Paid for the office supplies purchased on January 3 on account.

18 Received \)2,700 cash for helping a client sell real estate.

19 Defended a client in court and billed the client for \(1,800.

25 Received a bill for utilities, \)600. The bill will be paid next month.

29 Received cash on account, \(1,500.

30 Paid \)1,200 cash for a 12-month insurance policy starting on February 1.

30 Paid assistant’s semimonthly salary, \(1,120.

31 Paid monthly rent expense, \)1,800.

31 Paid cash dividends of $2,200.

Requirements

2. Open the following four-column accounts including account numbers: Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Land, 141; Building, 151; Furniture, 161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301; Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities Expense, 531.

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

Terrence Murphy opened a law office on January 1, 2018. During the first month of operations, the business completed the following transactions:

Jan. 1 Murphy contributed \(78,000 cash to the business, Terrence Murphy, Attorney. The business issued common stock to Murphy.

3 Purchased office supplies, \)600, and furniture, \(1,700, on account.

4 Performed legal services for a client and received \)1,000 cash.

7 Purchased a building with a market value of \(130,000, and land with a market value of \)25,000. The business paid \(25,000 cash and signed a note payable to the bank for the remaining amount.

11 Prepared legal documents for a client on account, \)400.

15 Paid assistant’s semimonthly salary, \(1,120.

16 Paid for the office supplies purchased on January 3 on account.

18 Received \)2,700 cash for helping a client sell real estate.

19 Defended a client in court and billed the client for \(1,800.

25 Received a bill for utilities, \)600. The bill will be paid next month.

29 Received cash on account, \(1,500.

30 Paid \)1,200 cash for a 12-month insurance policy starting on February 1.

30 Paid assistant’s semimonthly salary, \(1,120.

31 Paid monthly rent expense, \)1,800.

31 Paid cash dividends of $2,200.

Requirements

2. Open the following four-column accounts including account numbers: Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Land, 141; Building, 151; Furniture, 161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301; Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities Expense, 531.

Explain the five steps in journalizing and posting transactions.

Identify which types of accounts have a normal debit balance and which types of accounts have a normal credit balance.

Question:Preparing financial statements from the trial balance and calculating the debt ratio

Preparing financial statements from the trial balance and calculating the debt ratio

Account Title Debit Credit

Office Supplies 1,400

Cash 32,000

Accounts Receivable 9,100

Prepaid Insurance 2,600

Equipment 24,000

Accounts Payable 3,400

Unearned Revenue 1,296

Notes Payable 34,000

Common Stock 20,000

Dividends 3,000

Salaries Expense 1,600

Rent Expense 700

Utilities Expense 100

Service Revenue 15,804

Total Balance \( 74,500 \) 74,500

Requirements 4. Calculate the debt ratio as of July 31, 2018.
See all solutions

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