On March 1, 2014, David Richardson started a painting business near a historical housing district. David was the sole proprietor of the company, which he named DR Painting. During March 2014, DR Painting engaged in the following transactions: a. DR Painting received cash of $40,000 from David Richardson and gave capital to Richardson. b. The business paid $20,000 cash to acquire a truck. c. The business purchased supplies costing $1,800 on account. d. The business painted a house for a client and received $3,000 cash. e. The business painted a house for a client for $4,000. The client agreed to pay next week. f. The business paid $800 cash toward the supplies purchased in transaction c. g. The business paid employee salaries of $1,000 in cash. h. Richardson withdrew cash of $1,500. i. The business collected $2,600 from the client in transaction e. j. David paid $100 cash for personal groceries. Requirements 1. Analyze the preceding transactions in terms of their effects on the accounting equation of DR Painting. 2. Prepare the income statement, statement of owner’s equity, and balance sheet of the business after recording the transactions.
On March 1, 2014, David Richardson started a painting business near a historical housing district. David was the sole proprietor of the company, which he named DR Painting. During March 2014, DR Painting engaged in the following transactions: a. DR Painting received cash of $40,000 from David Richardson and gave capital to Richardson. b. The business paid $20,000 cash to acquire a truck. c. The business purchased supplies costing $1,800 on account. d. The business painted a house for a client and received $3,000 cash. e. The business painted a house for a client for $4,000. The client agreed to pay next week. f. The business paid $800 cash toward the supplies purchased in transaction c. g. The business paid employee salaries of $1,000 in cash. h. Richardson withdrew cash of $1,500. i. The business collected $2,600 from the client in transaction e. j. David paid $100 cash for personal groceries. Requirements 1. Analyze the preceding transactions in terms of their effects on the accounting equation of DR Painting. 2. Prepare the income statement, statement of owner’s equity, and balance sheet of the business after recording the transactions.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On March 1, 2014, David Richardson started a painting business near a historical
housing district. David was the sole proprietor of the company, which he
named DR Painting. During March 2014, DR Painting engaged in the following
transactions:
a. DR Painting received cash of $40,000 from David Richardson and gave capital to Richardson.
b. The business paid $20,000 cash to acquire a truck.
c. The business purchased supplies costing $1,800 on account.
d. The business painted a house for a client and received $3,000 cash.
e. The business painted a house for a client for $4,000. The client agreed to pay next week.
f. The business paid $800 cash toward the supplies purchased in transaction c.
g. The business paid employee salaries of $1,000 in cash.
h. Richardson withdrew cash of $1,500.
i. The business collected $2,600 from the client in transaction e.
j. David paid $100 cash for personal groceries.
Requirements
1. Analyze the preceding transactions in terms of their effects on the accounting equation of DR Painting.
2. Prepare the income statement, statement of owner’s equity, and balance sheet of the business after recording the transactions.
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