Posted: April 24th, 2016

what events would you expect to take place in April?

March 2: Received contributions of $20,000 from each of the two principal owners of the new business in exchange
for shares of stock.
March 7: Signed a two-year promissory note at the bank and received cash of $15,000. Interest, along with the
$15,000, will be repaid at the end of the two years.
March 12: Purchased $700 in miscellaneous supplies on account. The company has 30 days to pay for the supplies.
March 19: Billed a client $4,000 for services rendered by Expert in helping to install a new computer system.
The client is to pay 25% of the bill upon its receipt and the remaining balance within 30 days.
March 20: Paid $1,300 bill from the local newspaper for advertising for the month of March.
March 22: Received 25% of the amount billed to the client on March 19.
March 26: Received cash of $2,800 for services provided in assisting a client in selecting software for its computer.
March 29: Purchased a computer system for $8,000 in cash.
March 30: Paid $3,300 of salaries and wages for March.
March 31: Received and paid $1,400 in gas, electric, and water bills.

Required

1. Prepare a table to summarize the preceding transactions as they affect the accounting equation.
Identify each transaction with the date.

EXPERT CONSULTING SERVICES INC.
TRANSACTIONS FOR THE MONTH OF MARCH 2012

Assets = Liabilities +
Accounts Accounts Notes
Cash Receivable Computer Supplies Payable Payable
Date
F
3/2
F F
3/7
Bal. C C
3/12 F F
C C
Bal. C C
3/19 F
C C
Bal. C C C
3/20 F
C
Bal. C C C C
3/22 F F
C
Bal. C C C C
3/26 F
C
Bal. C C C C
3/29 F F
C
Bal. C C C C C
3/30 F
C
Bal. C C C C C
3/31 F
Bal. C C C C C C

TOTAL ASSETS: C TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY:

2. Prepare an income statement for the month ended March 31, 2012.

EXPERT CONSULTING SERVICES INC.
INCOME STATEMENT
FOR THE MONTH ENDED MARCH 31, 2012

Revenues:
T F
T F C
Expenses:
T F
T F
T F C
Net income C

3. Prepare a classified balance sheet at March 31, 2012.
Note: Classify Assets and Liabilities in the order of Liquidity

EXPERT CONSULTING SERVICES INC.
BALANCE SHEET
MARCH 31, 2012

Assets
Current assets:
T F
T F
T F
Total current assets C
Property, plant, and equipment:
T F
Total assets C

Liabilities and Stockholders’ Equity
Current liabilities:
T F
Long-term debt:
T F
Total liabilities C
Capital stock F
Retained earnings F
Total stockholders’ equity C
Total liabilities and stockholders’ equity C

4. From reading the balance sheet you prepared in (3), what events would you expect to take place in April?
Explain your answer.

T
roommates. The
transactions occurred

business in exchange

rest, along with the

to pay for the supplies.
puter system.

ware for its computer.

g equation.

Stockholders’ Equity
Capital Retained
Stock Earnings
F

C

C
F
C C
F
C C

C C
F
C C

C C
F
C C
F
C C

C
take place in April?
PROBLEM 3-5: IDENTIFICATION OF EVENTS WITH SOURCE DOCUMENTS

Many events are linked to a source document. Following is a list of events that occurred in an entity.
a. Paid a one-year insurance policy
b. Paid employee payroll
c. Provided services to a customer on account
d. Identified supplies in the storeroom destroyed by fire
e. Received payment of bills from customers
f. Purchased land for future expansion
g. Calculated Taxes Due
h. Entered into a car lease agreement and paid the tax, title, and licens