Jose Loder established Bronco Consulting on August 1, 2014. The effect of each transaction and the balances after each transaction for August are shown below.
Assets 5Liabilities 1 Owner’s Equity
Cash +
Accounts
Receivable + Supplies =
Accounts
Payable +
Jose Loder,
Capital −
Jose Loder,
Drawing +
Fees
Earned −
Salaries
Expense −
Rent
Expense −
Auto
Expense −
Supplies
Expense −
Misc.
Expense
a. +75,000 +75,000
b. +9,000 +9,000
Bal. 75,000 9,000 9,000 75,000
c. +92,000 +92,000
Bal. 167,000 9,000 9,000 75,000 92,000
d. –27,000 –27,000
Bal. 140,000 9,000 9,000 75,000 92,000 –27,000
e. –6,000 –6,000
Bal. 134,000 9,000 3,000 75,000 92,000 –27,000
f. +33,000 +33,000
Bal. 134,000 33,000 9,000 3,000 75,000 125,000 –27,000
g. –23,000 –15,500 –7,500
Bal. 111,000 33,000 9,000 3,000 75,000 125,000 –27,000 –15,500 –7,500
h. –58,000 –58,000
Bal. 53,000 33,000 9,000 3,000 75,000 125,000 –58,000 –27,000 –15,500 –7,500
i. –6,100 –6,100
Bal. 53,000 33,000 2,900 3,000 75,000 125,000 –58,000 –27,000 –15,500 –6,100 –7,500
j. –15,000 –15,000
Bal. 38,000 33,000 2,900 3,000 75,000 –15,000 125,000 –58,000 –27,000 –15,500 –6,100 –7,500
Instructions
1. Prepare an income statement for the month ended August 31, 2014.
2. Prepare a statement of owner’s equity for the month ended August 31, 2014.
3. Prepare a balance sheet as of August 31, 2014.
4. (Optional). Prepare a statement of cash flows for the month ending August 31, 2014.
Answer:
1. BRO
2014 $75,000
Net income for August 10,900
$85,900
Less withdrawals 15,000
Increase in owner’s equity 70,900
Jose Loder, capital, August 31, 2014 $70,900
3. BRONCO CONSULTING
Balance Sheet
August 31, 2014
Assets Liabilities
Cash $38,000 Accounts payable $ 3,000
Accounts receivable 33,000
Supplies 2,900 Owner’s Equity
Jose Loder, capital 70,900
Total liabilities and
Total assets $73,900 owner’s equity $73,900
4. (Optional)
BRONCO CONSULTING
Statement of Cash Flows
For the Month Ended August 31, 2014
Cash flows from operating activities:Cash received from customers $ 92,000
Deduct cash payments for expenses
and payments to creditors* 114,000
Net cash flows used for operating activities $(22,000)
Cash flows from investing activities 0
Cash flows from financing activities:
Cash received as owner’s investment $ 75,000
Deduct cash withdrawal by owner 15,000
Net cash flows from financing activities 60,000
Net increase in cash and August 31, 2014, cash balance $ 38,000
* $27,000 + $6,000 + $23,000 + $58,000; These amounts are taken from the
cash column shown in the problem