READ THROUGH ATTACHMENT VERY CAREFULLY  FIRST AND GIVE ALL WORKINGS

Basic transaction processing

On November 1 of the current year, Richard Simmons

established a sole proprietorship. The following transactions occurred during the month:

1: Simmons invested $32,000 into the business for $32,000 in common stock.

2: Paid $5,000 to acquire a used minivan.

3: Purchased $1,800 of office furniture on account.

4: Performed $2,100 of consulting services on account.

5: Paid $300 of repair expenses.

6: Received $800 from clients who were previously billed in item 4.

7: Paid $500 on account to the supplier of office furniture in item 3.

8: Received a $150 electric bill, to be paid next month.

9: Simmons withdrew $800 from the business.

10: Received $250 in cash from clients for consulting services rendered.

Instructions

a. Arrange the following asset, liability, and owner’s equity elements of the accounting equation:

Cash,

Accounts Receivable, Office Furniture, Van, Accounts Payable, Common

Stock/Dividends, and Revenues/Expenses. (See Exhibit 1.5)

b. Record each transaction on a separate line. After all transactions have been recorded, compute

the balance in each of the preceding items.

c. Answer the following questions for Simmons.

(1) How much does the company owe to its creditors at month-end? On which financial

statement(s) would this information be found?

(2) Did the company have a “good” month from an accounting viewpoint? Briefly explain

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