Chapter 2, Problem 2.59AP

LO 2,3

(Learning Objectives 2, 3: Analyze the impact of business transactions on the accounting equation and accounts) The following amounts summarize the financial position of Grueser Computing, Inc., on September 30. 2018:

Assets

=

Liabilities

+

Stockholders' Equity

Cash

+

Accounts Receivable

+

Supplies

+

Equipment

=

Accounts Payable

+

Common Stock

+

Retained Earnings

Bal

2,500

3,250

12,200

8,300

6,300

3,350

During October 2018. Grueser Computing completed these transactions:

1. a. The company received cash of $3,700 and issued common stock.
2. b. Performed services for a customer and received cash of $6,700.
3. c. Paid $4,700 on accounts payable.
4. d. Purchased supplies on account, $800.
5. e. Collected cash from a customer on account, $1,300.
6. f. Consulted on the design of a computer system and billed the customer for services rendered, $4,700.
7. g. Recorded the following business expenses for the month: (1) paid office rent—$1,900: (2) paid advertising—$500.
8. h. Declared and paid a cash dividend of $3,400.

Requirements

1. 1. Analyze the effects of the preceding transactions on the accounting equation of Grueser Computing, Inc.
2. 2. Prepare the income statement of Grueser Computing. Inc., for the month ended October 31, 2018. List expenses in decreasing order by amount.
3. 3. Prepare the entity's statement of retained earnings for the month ended October 31,2018.
4. 4. Prepare the balance sheet of Grueser Computing, Inc., at October 31,2018.