Recording Business

Full file at

Transparency Master 2-1

RECORDING BUSINESS

TRANSACTIONS

Jim's Lawn Care

1. Jim Hamilton began a lawn care business in May by depositing $800 in a business bank account in exchange for capital stock.
2. Borrowed $1,000 by issuing a note payable.
3. Paid cash for supplies, $50.
4. Performed lawn care services for cash and received $700.
5. Paid for an advertisement in a local newspaper, $150.
6. Performed lawn care services for cash customers and received $420.
7. Paid wages to a part-time assistant, $85.
8. Performed lawn care services for cash and received $600.
9. At the end of May, Jim’s Lawn Care paid dividends of $100.

Transparency Master 2-2

RECORDING BUSINESS TRANSACTIONS

Jim’s Lawn Care — Solution

Notes / Capital / Retained
Cash / Supplies / Payable / Stock /

Earnings

1. / 800 / 800 /

Investment

Bal. / 800 / 800
2. / 1,000 / 1,000
Bal. / 1,800 / 1,000 / 800
3. / –50 / 50
Bal. / 1,750 / 50 / 1,000 / 800
4. / 700 / 700 / Fees earned
Bal. / 2,450 / 50 / 1,000 / 800 / 700
5. / –150 / –150 / Adv. Exp.
Bal. / 2,300 / 50 / 1,000 / 800 / 550
6. / 420 / 420 / Fees earned
Bal. / 2,720 / 50 / 1,000 / 800 / 970
7. / –85 / –85 / Wage Exp.
Bal. / 2,635 / 50 / 1,000 / 800 / 885
8. / 600 / 600 / Fees earned
Bal. / 3,235 / 50 / 1,000 / 800 / 1,485
9. / –100 / –100 / Dividend
Bal. / 3,135 / 50 / 1,000 / 800 / 1,385

Statement of Cash Flows Income Statement

1. Financing 8004. Lawn Care Revenue 700

2. Financing1,0005. Advertising Expense –150

3. Operating–506. Lawn Care Revenue 420

4. Operating7007. Wage Expense–85

5. Operating–1508. Lawn Care Revenue 600

6. Operating420 Net Income $1,485

7. Operating–85

8. Operating600

9. Financing –100

Increase in Cash $3,135

Transparency Master 2-3

FINANCIAL STATEMENTS

Jim’s Lawn Care

Income Statement

For the Month Ended May 31, 20—

Fees earned$

Operating expenses:

Advertising expense$

Wages expense$

Total operating expenses$

Net income$

Jim’s Lawn Care

Retained Earnings Statement

For the Month Ended May 31, 20—

Net incomefor May$

Less dividends$

Retained earnings, May 31$

Jim’s Lawn Care

Balance Sheet

May 31, 20—

Assets

Cash$

Supplies$

Total assets$

Liabilities

Notes payable$

Stockholders’ Equity

Capital stock$

Retained earnings$$

Total liabilities and stockholders’ equity$

Transparency Master 2-4

FINANCIAL STATEMENTS — SOLUTIONS

Jim’s Lawn Care

Income Statement

For the Month Ended May 31, 20—

Fees earned$1,720

Operating expenses:

Advertising expense$150

Wage expense 85

Total operating expenses 235

Net income$1,485

Jim’s Lawn Care

Retained Earnings Statement

For the Month Ended May 31, 20—

Net incomefor May$1,485

Less dividends 100

Retained earnings, May 31$1,385

Jim’s Lawn Care

Balance Sheet

May 31, 20—

Assets

Cash$3,135

Supplies 50

Total assets$3,185

Liabilities

Notes payable 1,000

Stockholders’ Equity

Capital stock$ 800

Retained earnings 1,385 2,185

Total liabilities and stockholders’ equity$3,185

Transparency Master 2-5

Jim’s Lawn Care

Statement of Cash Flows

For the Month Ended May 31, 20—

Cash flows from operating activities:

Cash received from customers$

Cash paid for advertising$

Cash paid for wages$

Cash paid for supplies$

Cash flows from operating activities$

Cash flows from investing activities:

Cash flows from financing activities:

Cash received from issuing

capital stock$

Cash received from notes payable$

Cash paid for dividends$

Cash flows from financing activities$

Net increase in cash during May$

Cash as of May 1$

Cash as of May 31$

Transparency Master 2-6

Jim’s Lawn Care

Statement of Cash Flows

For the Month Ended May 31, 20—

Cash flows from operating activities:

Cash received from customers$1,720

Cash paid for advertising 150

Cash paid for wages 85

Cash paid for supplies 50

Cash flows from operating activities 1,435

Cash flows from investing activities:

Cash flows from financing activities:

Cash received from issuing

capital stock 800

Cash received from notes payable 1,000

Cash paid for dividends 100

Cash flows from financing activities 1,700

Net increase in cash during May 3,135

Cash as of May 1 –0–

Cash as of May 31$3,135

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