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Financial & Managerial Accounting
Found in: Page 45
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Rivera Roofing Company, owned by Reyna Rivera, began operations in July and completed these transactions during that first month of operations.

July 1 Reyna Rivera invested $80,000 cash in the company in exchange for its common stock.

2 The company rented office space and paid $700 cash for the July rent.

3 The company purchased roofing equipment for $5,000 by paying $1,000 cash and agreeing to pay the $4,000 balance in 30 days.

6 The company purchased office supplies for $600 cash.

8 The company completed work for a customer and immediately collected $7,600 cash for the work.

10 The company purchased $2,300 of office equipment on credit.

15 The company completed work for a customer on credit in the amount of $8,200.

17 The company purchased $3,100 of office supplies on credit.

23 The company paid $2,300 cash for the office equipment purchased on July 10.

25 The company billed a customer $5,000 for work completed; the balance is due in 30 days.

28 The company received $8,200 cash for the work completed on July 15.

30 The company paid an assistant’s salary of $1,560 cash for this month.

31 The company paid $295 cash for this month’s utility bill.

31 The company paid $1,800 cash in dividends to the owner (sole shareholder).

Required 1. Create the following table similar to the one in Exhibit 1.9.

Use additions and subtractions within the table to show the dollar effects of each transaction on individual items of the accounting equation. Show new balances after each transaction.

Rent is the cost of using property owned by someone else and the total of the accounting equation is $103,545.

See the step by step solution

Step by Step Solution

Definition of Rent Expense

The rent expense is defined as the amount of money spent by the business for using the property owned by someone else.

Preparation of accounting equation

Assets=LiabilitiesEquity

Date

Cash

AR

Off

Off

Roof

Accounts

Common

-Div

Rev

-Exp

($)

($)

Supp ($)

Equip ($)

Equip ($)

Payable ($)

Stock ($)

($)

($)

($)

July

1

80,000

80,000

Bal

80,000`

80,000

2

-700

-700

Bal

79,300

80,000

-700

3

-1,000

5,000

4,000

Bal

78,300

5,000

4,000

80,000

-700

6

-600

600

Bal

77,700

600

5,000

4,000

80,000

-700

8

7,600

7,600

Bal

85,300

600

5,000

4,000

80,000

7,600

-700

10

2,300

2,300

Bal

85,300

600

2,300

5,000

6,300

80,000

7,600

-700

15

8,200

8,200

Bal

85,300

8,200

600

2,300

5,000

6,300

80,000

15,800

-700

17

3,100

3,100

Bal

85,300

8,200

3,700

2,300

5,000

9,400

80,000

15,800

-700

23

-2,300

-2,300

Bal

83,000

8,200

3,700

2,300

5,000

7,100

80,000

15,800

-700

25

5,000

5,000

Bal

83,000

13,200

3,700

2,300

5,000

7,100

80,000

20,800

-700

28

8,200

-8,200

Bal

91,200

5,000

3,700

2,300

5,000

7,100

80,000

20,800

-700

30

-1,560

-1,560

Bal

89,640

5,000

3,700

2,300

5,000

7,100

80,000

20,800

-2,260

31

-295

-295

Bal

89,345

5,000

3,700

2,300

5,000

7,100

80,000

20,800

-2,555

31

-1,800

-1,800

Bal

87,545

5,000

3,700

2,300

5,000

7,100

80,000

-1,800

20,800

-2,555

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