How did he get number 5 explain please 20Chapter 1 Accounting in BusinessSOLUTION1.Assets= +LiabilitiesEquity+ AccountsReceivable+ Furniture + Equipment- ExpensesCashJ. Worthy,Capital+Accounts+J. Worthy,+Revenues%3!PayableWithdrawalsa.$3,000$15,000$18,000b.- 600+$600Bl.2,40060015,00018,000+C.- 500$500Bl.1,900600+15,00018,000500d..1,200+$1,200Bal.1,900+.60016,2001,20018,000500%3D+ 825e.$ 825Bal.2,725+60016,2001,20018,000825500+ $100100Bl.Bal.2,72510060016,2001,200500+18,000925%3D9.+ 100100Bal.2,82560016,20018,000500+1,200+925h.- 125125Bal.2,70060016,2001,200+18,000925625+ 9303,630 +1.930Bal.60016,2001,20018,0001,855625++j.- 400400Bal.3,230+60016,200800+18,0001,855625%3Dk.- 900$900Bal.$2,330$ 600$ 16,200%24$800$ 18,000$ 900$1.855$625++2.3.EXPRESSIONSEXPRESSIONSIncome StatementStatement of Owner's EquityFor Month Ended December 31For Month Ended December 3100U. Worthy, Capital, December 1"....Plus: Investments by owner......Revenues$ 0Services revenue.........$ 1,855$18,000Expenses> Net income .1,23019,230Rent expense..$50019,230Wages expense.........125Less: Withdrawals by owner......900Total expenses...........625J. Worthy, Capital, December 31 ...$18,330Net income..$1,230.••....*If Expressions had existed before December 1, the beginningcapital balance would equal the prior period's ending balance.4.EXPRESSIONSBalance SheetDecember 31AssetsLiabilities$ 800Accounts payableEquityJ. Worthy, Capital... ..Total liabilities and equity......Cash$ 2,330....Furniture600Equipment16,20018,330 4Total assets2419,130$19,130+ + + ++ ++ + ++ + + + + ++ I + + - Chapter 1 Accounling in Bustress215.EXPRESSIONSStatement of Cash FlowsFor Month Ended December 31Cash flows from operating activitiesCash received from customers..$1,855Cash pald for expenditures ($500 + $125+ $400).Net cash provided by operating activities.Cash flows from investing activitiesCash paid for furniture..............(1,025)$ 830(600)Net cash used by investing activities.Cash flows from financing activitiesCash investments by ownerCash withdrawals by ownerNet cash provided by financing activitiesNet increase in cash ......(600)3,000(9002,100$2,330Cash balance, December 1Cash balance, December 31242,3306. Return on assets =Net income$1,230$1,230= 6.63%Average assets*Uses the initial $18,000 investment as the beginning balance for the start-up period only.(S18,000* + $19,130)/2 $18,565sluloning oobaib lluRollbSummary: Cheat SheetACCOUNTING USESTRANSACTION ANALYSISAssets: Resources a company owns or controls that are expected to yieldfuture benefits.nLiabilities: Creditors' claims on assets. These are obligations to providein assets, products, or services to others.Equity: Owner claim on assets. It consists of:External users: Do not directly run the organization and have limited ac-cess to its accounting information. Examples are lenders, shareholders,external auditors, nonexecutive employees, labor unions, regulators, vot-ers, donors, suppliers, and customers.Internal users: Directly manage organization operations. Examples arethe CEO and other executives, research and development managers,purchasing managers, production managers, and other managerial-levelemployees.Private accounting: Accounting employees working for businesses.Public accounting: Offering audit, tax, and advisory services to others.+ Owner,Capital owner contributions, which increase equity.Owner,Withdrawals owners for personal use, which reduce equity.Owner investments are inflows of cash and other net assets fromOwner withdrawals are outflows of cash and other assets toRevenues increase equity (via net income) from sales of productsand services to customers; examples are sales of products, consult-ing services provided, facilities rented to others, and commissionsfrom services.bote+ RevenuesETHICS AND ACCOUNTINGFraud triangle: Three factors that push a person to commit fraud.• Opportunity: Must be able to commit fraud with a low risk of getting caught.Pressure, or incentive: Must feel pressure or have incentive to commit fraud.• Rationalization, or attitude: Justifies fraud or does not see its criminal nature.(8)Expenses decrease equity (via net income) from costs of providingproducts and services to customers; examples are costs of employeetime, use of supplies, advertising, utilities, and insurance fees.- ExpensesAccounting equation: Applies to all transactions and events, to allcompanies and organizations, and to all points in time.Common business entities:Assets - Liabilities + EquitySele ProprietorshipPartnership2 or more, called partners easy to set up.Expanded accounting equation:Number of owmers1 owner, easy to set up.Business taxationNo additional tusires income taxNo additional business income taxEquityUnlimited labity. Owner is personaly lablefor proprietorship debts.Owner labilityUnlimited ilability. Partners are jointly leble forAssets Liabilities +Owner, Capital - Owner, Withdrawals + Revenues- Expensespartnership debtsSummary of transactions:Financial effects of the following transactions are shown in the table usingthe expanded accounting equation.Legal entityNot e separate legal entityNot a separate legal entity.Business ends with owner death or choiceBusiness ends with a partner death or choice.Business lifeTransaction I: Investment by ownerTransaction 2: Purchase supplies for cashTransaction 3: Purchase equipment for cashTransaction 4: Purchase supplies on creditTransaction 5: Provide services for cashTransactions 6 and 7: Payment of expenses in cash s bioononTransaction 8: Provide services and facilities for creditTransaction 9: Receipt of cash from accounts receivableTransaction 10: Payment of accounts payableTransaction I1: Withdrawal of cash by ownerCorporationLimited Liability Company (LLC)0000Number of owmers 1 or more, called shareholders; can get many investorsby selling stock or shares of corporate ownership.1 or more, called members.No additional business income taxBusiness taxation Addiional corporate income taK.Limited lability. Owners, called shareholders jorstockholdersl,are not lable for corporate acts and debts are not personally lable for LLC detesLimited lablity Owners, called membersOwner liabilityA separate entity with the same rightsand responsibilties as a person.Legal entityA separate entity with the same rights andresponsibiltes as a person.IndefiniteBusiness feIndefinte.

Chapter 1 Accounting in Grs s 5. EXPRESSIONS Statement of Cash Flows For Month Ended December 31 Cash flows from operating activities Cash received from customers. $1,855 Cash pald for expenditures ($500 + $125 + $400)... Net cash provided by operating activities.. Cash flows from investing activities Cash paid for furniture Net cash used by investing activities. Cash flows from financing activities Cash investments by owner Cash withdrawals by owner (1,025) $ 830 (600) (500) 3,000 (900) Net cash provided by financing activities 2,100 Net increase in cash $2,330 Cash balance, December 1. Cash balance, December 31. $2,330 6. Return on assets = Net income $1,230 $1,230 = 6.63% %3D Average assets (S18,000* + $19,130)/2 $18,565 *Uses the initial S18,000 investment as the beginning balance for the start-up period only.