Module 01 Written Assignment – The Accounting Equation
The conceptual framework reminds you that revenues are recognized when earned and not necessarily when collected. Also, expenses are recorded when incurred (used), not necessarily when paid. This is known as accrual accounting.
Bill Smith opened Smith Construction on April 1, 2010. Review the transactions and financial position of Smith Construction for April in the
Excel Template
.
Requirements:
Enter the transactions for May into the accounting equation, calculating new balance after each entry.
Prepare the Income Statement for the month of May.
Prepare the Statement of Retained Earnings for the Month of May.
Prepare the Balance Sheet as of May 31, 20xx.
Module 1 Assignment:
Bill Smith opened Smith Construction on April 1, 20xx. The following amounts summarize the transactions and financial position of Smith construction as of May 31.
During May the following transactions occurred:
1-May Smith received $10,000 as an inheritance and used it to buy stock in the company.
7-May Smith paid his accounts payable balance.
15-May Smith replaced some windows for a client and received $5,000 cash for his services
17-May Smith collected $1,200 from a customer for a job performed in April
20-May Smith purchased supplies for $1,000 on account
24-May Smith gave a bid to a customer and billed the customer for the services performed $800
25-May Smith sold $5,000 of company stock to his brother
28-May Smith paid wages to his workers of $1,800
30-May Smith paid office rent of $1,000
30-May Smith paid dividends to himself of $1,400
Requirements:
1
April Bal.
1-May
Enter the transactions for May into the accounting equation, calculating new balances after each entry.
+
Assets
=
Liabilities
Accounts
Accounts
Common
Cash
+
receivable
+
Supplies
+
Equipment
payable
stock
Rent Expense
–
Dividends
+
+
+
$24,000.00 =
$5,100.00
$5,100.00
–
$1,980.00
–
–
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$1,540.00 +
$3,680.00 +
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$1,540.00 +
$3,680.00 +
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$1,540.00 +
$3,680.00 +
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$1,540.00 +
$3,680.00 +
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$1,540.00 +
$3,680.00 +
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$1,540.00 +
$3,680.00 +
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$1,540.00 +
$3,680.00 +
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$1,540.00 +
$3,680.00 +
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$1,540.00 +
$3,680.00 +
+
$24,000.00 =
$5,100.00 +
$21,000.00 +
$5,100.00
–
$1,980.00
–
–
+
$21,000.00
+
–
$3,680.00 +
$3,680.00
+
Stockholders’ Equity
Service
Salaries
revenue
expense
$1,540.00 +
$1,540.00
+
+
+
7-May
15-May
17-May
20-May
24-May
25-May
28-May
30-May
30-May
Bal.
2
Prepare the Income Statement for the month of May for Smith Construction.
Smith Construction
Income Statement
For the Two Months Ended May 31, 20xx
Revenues:
Service Revenue
Expenses:
Salaries Expense
Rent Expense
Net Income
3
Prepare the Statement of Retained Earnings for Smith Construction for the Month of May.
Smith Construction
Statement of Retained Earnings
For the Two Months Ended May 31, 20xx
Retained Earnings, April 1
Add: Net Income
Less: Dividends
Net Increase in Retained Earnings
Retained Earnings, May 31
4
$0
Prepare the Balance Sheet for Smith Construction as of May 31, 20xx
Smith Construction
Balance Sheet
May 31, 20xx
ASSETS
Cash
Accounts Receivable
Supplies
Equipment
LIABILITIES
Accounts Payable
Total Liabilities
STOCKHOLDER’S EQUITY
Common Stock
Retained Earnings
Total Stockholder’s Equity
Total Assets
Total Liabilities & Stockholders Equity
Retained
Earnings
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