Ani Mazanashvili TAF2810

14.02.2018
HW N1

P1-42
Carl Redmon completed these transactions during the first half of December:
Dec. 2. Invested $10,000 to start a consulting practice titled Redmon Consulting
Dec. 2. Paid monthly office rent, $500.
Dec. 3. Paid cash for a Dell computer $2000. This equipment is expected to remain in
service for 5 years
Dec. 4. Purchased office furniture on account $3600. The furniture should last for five years.
Dec. 5. Purchased supplies on account $300.
Dec. 9. Performed consulting service for a client on account $1700
Dec. 12. Paid utility expenses, $200.
Dec. 18. Performed service for a client and received cash of $800.
_____
_____
1. Analyze the effects of Redmon’s transactions on the accounting equation. Use the format of
Exhibit 1-7, page 18 and include these headings: Cash, Accounts Receivable, Supplies,
Equipment, Furniture, Accounts Payable and Carl Redmon, Capital
2. Prepare the income statement of Redmon Consulting for the month ended December 31,
2007. List expenses in decreasing order by amount (p.20)
3. Prepare the statement of owner’s equity for the month ended December 31, 2007 (pg.20)
4. Prepare the balance sheet at December 31, 2007 (p.20)
1.
Assets Liability Equity
Date Cash ($) Accounts Supply Equipment Furniture Accounts Capital
receivable payable ($)
Dec.2 10000 10000
Dec.2 (500) (500)
Dec.2 9500 9500
Dec.3 (2000) 2000
Dec.3 7500
Dec.4 3600 3600
Dec.5 300 300
Dec.9 1700 1700
Dec.9 11200
Dec.12 (200) (200)
Dec.12 7300 11000
Dec.18 800 800
Dec.18 8100 11800

Accounting equation
Total assets = 8100+1700+300+2000+3600=15700
Total liability=3600+300=3900
Ani Mazanashvili TAF2810
14.02.2018
HW N1
Capital=11800
Assets=liability + capital
15700=3900 + 11800 = 15700

2.
Redmon Consulting
Income Statement
Month Ended December 31, 2007
Revenues
Service Revenue ---------------------------------------------------------------- $2500
Total Revenues------------------------------------------------------------------ 2500
Expenses
Rent expenses-------------------------------------------------------------------- 500
Utility expenses------------------------------------------------------------------ 200
Total expenses------------------------------------------------------------------- 700
Net income----------------------------------------------------------------------- 1800

3.
Redmon Consulting
Statement of owner’s equity
Month Ended December 31, 2007
Capital on Dec.1, 2007 -------------------------------------------------------- 0
Investment------------------------------------------------------------------------- 10000
Net income------------------------------------------------------------------------ 1800
11800

Total withdrawals by owner---------------------------------------------------- 0

Capital on 31.Dec, 2007-------------------------------------------------------- $11800

Ani Mazanashvili TAF2810
14.02.2018
HW N1

4.
Redmon Consulting
Balance Sheet
December 31, 2007
Assets Liability
Cash----------------------- $8100 Accounts Payable----- 3900
Accounts receivable---- 1700
Supply-------------------- 300 Equity
Equipment--------------- 2000 Capital------------------ 11800
Furniture----------------- 3600
Total Liabilities and 15700
Total assets-------------- 15700 Owner’s Equity-------