Problem N0. 6
A small one-person business is just starting. It will provide housekeeping and lawn-care services for other firms. Following are the start-up financial events for the company: a. Place $5,000 into a checking account for the company by the proprietor. b. Buy cleaning equipment and lawn equipment for cash, $1,500. c. Buy supplies on credit from Janitor Supply Co, $200. d. First job pays $450 for lawn services. e. Bill R and J Company for housekeeping services, $500. f. Pay wages of $300. g. Pay truck expenses at Shell Service Station, $120. h. R and J pays their bill to the company. i. Purchase supplies for $200. j. Pay Janitor Supply Co. in full. k. Generate financial statements. For Ajax Inc., set up the initial Balance Sheet, make the entries for the month using the Accounting Equation, and present the Income Statement for the next month and the ending Balance Sheet. At the end of this month, the following balances are in the accounts: Cash $5,000, inventory $10,000, equipment $3,000, and $10,000, one Jones $10000, common stock $10,000, retained earnings $8,000. (Note that the value of the inventory sold is unknown at the time of sale. However, the value of the remaining inventory is known at the end of the month. The value sold is the difference between the inventory received and the inventory remaining.) a. Buy inventory from Jones on credit, $10,000. b. Sell goods for $4,000. c. Sell common stock, $1,000. d. Pay wages, $2,000. e. Pay tax, $1,000. f. Sell goods to Smith on credit for $15,000. g. Pay rent, $100. h. Pay Jones $2,000. i. Depreciate equipment $200. j. Inventory at the end of the month is worth $7,000. k. End of month. For Gis whiz Inc., set up the March Income Statement and the Balance Sheet at the end of March also generate the C/F Statement. Giswhiz is an organization of manufacturers’ representatives who sell products for other firms and do not manufacture any of their own products. The company’s income is derived from sales commissions. Giswhiz also has some equipment that it rents to customers.