MAN 213

Principles of Financial Accounting

Spring 2018-2019
In-Class Exercise
Karla Tanner opens a Web consulting business called Linkworks and completes the following
transactions in its first month of operations.

April 1 Tanner invested $120,000 cash along with office equipment valued at $28,800 in the
company in exchange for common stock.
2 The company prepaid $7,200 cash for 12 months’ rent for office space.
3 The company made credit purchases for $14,400 in office equipment and $2,880 in office
supplies. Payment is due within 10 days.
6 The company completed services for a client and immediately received $2,000 cash.
9 The company completed a $9,600 project for a client, who must pay within 30 days.
13 The company paid $17,280 cash to settle the account payable created on April 3.
19 The company paid $6,000 cash for the premium on a 12-month insurance policy.
22 The company received $7,680 cash as partial payment for the work completed on April 9.
25 The company completed work for another client for $2,640 on credit.
28 The company paid $6,200 cash in dividends.
29 The company purchased $960 of additional office supplies on credit.
30 The company paid $700 cash for this month’s utility bill.

Required:

a. Record the effect of the transactions into the Fundamental Accounting Equation.
b. Find the total balance of Total of Assets, Liabilites and Shareholders’ Equity.
c. What is the net income of the company for April?