On January 1 of the current year, the assets and liabilities of Chol James, aa Public Health consultant are as follows: Cash $2,000, Accounts receivable/ Debtors $6,400, Supplies $1,700, land $20,000 and Accounts Payable / Creditors $3,060. Chol James’ Public Health consultancy is a proprietorship owned and operated by Chol James. Currently, office spaceand office equipment are being rented. Pending the construction of an office complex on land purchased last year. Business transactions during January are summarized as follows: a. Received cash from clients for services $7,856. b. Paid creditors on account $2,110 c. Received cash from Chol James as an additional investment $7,400. d. Paid office rent for the month $2,400 e. Charged clients for legal services on account $4,050. f. Received cash from clients on account $6,000. g. Purchased office supplies on account $490. h. Received invoice for community health promotion from Save the Children for January (to be paid on Feb 10th). $3270. i. Paid the following: wages expense $1,700, promotion service expense $500, utilities expense $650, and miscellaneous expense $150. j. Determined that cost of office supplies on hand was $1960; therefore the cost of supplies used during the month was $230.. k. James withdrew $2,000 in cash from the business for personal use. Requirements: a. Determine the amount of Owners equity (Chol James,capital) as of January 1 of the current year. b. State the assets, liabilities, and Owners equity as of January 1 in equation form and indicate the increases and decreases. c. Journalize the transactions a to k. d. Prepare an income statement for January, a statement of owner’s equity for January and a balance sheet as at January 31st.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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PROBLEM THREE: Accounting analysis and basicfinancial statements

On January 1 of the current year, the assets and liabilities of Chol James, aa Public Health consultant are as follows: Cash $2,000, Accounts receivable/ Debtors $6,400, Supplies $1,700, land $20,000 and Accounts Payable / Creditors $3,060.

Chol James’ Public Health consultancy is a proprietorship owned and operated by Chol James. Currently, office spaceand office equipment are being rented. Pending the construction of an office complex on land purchased last year. Business transactions during January are summarized as follows:

a. Received cash from clients for services $7,856.

b. Paid creditors on account $2,110

c. Received cash from Chol James as an additional investment $7,400.

d. Paid office rent for the month $2,400

e. Charged clients for legal services on account $4,050.

f. Received cash from clients on account $6,000.

g. Purchased office supplies on account $490.

h. Received invoice for community health promotion from Save the Children for January (to be paid on Feb 10th). $3270.

i. Paid the following: wages expense $1,700, promotion service expense $500, utilities expense $650, and miscellaneous expense $150.

j. Determined that cost of office supplies on hand was $1960; therefore the cost of supplies used during the month was $230..

k. James withdrew $2,000 in cash from the business for personal use.

Requirements:

a. Determine the amount of Owners equity (Chol James,capital) as of January 1 of the current year.

b. State the assets, liabilities, and Owners equity as of January 1 in equation form and indicate the increases and decreases.

c. Journalize the transactions a to k.

d. Prepare an income statement for January, a statement of owner’s equity for January and a balance sheet as at January 31st.

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