As of December 31, Charles Company had $12,000 in cash, held $95,000 of inventory, and owned other items

that originally cost $13,000. Charles Company had also borrowed $40,000 from First City Bank. Prepare a
balance sheet for Charles Company as of December 31. Be sure to label each item and each column with
appropriate terms.

A/C ting B/S E A= L&E

Us/UK
Assets L&E

A
India
L&E Assets

Stake holders Employeses

Suppliers
Bankers
Customers
Sh.Holders
Investors
Lendors Creditors
B.Holders/ Debenture
Govt

Capital Own savings Borrow friends/Parents

Securities Shares Equity Capital By isuue of shares to public

SHs Investors Capital Own Any loss never refunded

Loan Lender Debentures/Bonds

Fixed Interst
Refund After
 Types of Accounting
FA MA TA

India
ICAI FA MA CA ICWAI

FA CA ICAI
I B/S CFS

Rev/I Expenses

TR TE Diff P/L

On a particualr given date

On 31st Mar 2020

A
Liabilty 5000 Cash

Liv Ope CF
Aca Fina CF
Enter Invest CF
wned other items
nk. Prepare a
column with

SEC SEBI

SOX Company Law

X Y
100 10
25 2
P P
Value
P 50
Cash dis 2
P 48

after 1 we 50
30 days
Trade Discount 1
Borrow friends/Parents

never refunded
 During the month of June, Bon Voyage Travel recorded the following transactions:
1. Owners invested $25,000 in cash to start the business. They received common stock.
2. The month’s rent of $500 was paid in cash.
$500 was pre paid in cash.
3. Equipment costing $8,000 was bought for cash
costing $5,000 was bought on credit.
4. $500 was paid for office supplies.
5. Advertising costing $750 was paid for with cash.
6. Paid $3,000 employee salaries in cash.
7. Earned travel commissions of $10,000 of which $2,000 was received in cash.
8. Paid $3,000 of the $5,000 owed to the equipment supplier.
9. Used $100 of the office supplies.
10. Charged $1,000 of miscellaneous expenses on the corporate credit card.
11.Required:
a. Prepare an analysis of the month’s transactions using the same tabular format
as shown in Problem 1–4 (ignore taxes).
b. Prepare a balance sheet as of the end of the month.
c. Prepare an income statement for the month.
d. Explain the changes in the Cash account.
e. Explain why the change in the Cash account and the month’s income are
not the same.

Debtors
Cash Equipment Pre-paid rent Office supplies Receivables
Capital 25000+
25000
Rent 500-
24500
Pre Paid Rent 500- 500
TA=24500 24000 500
Eq.pur on cash 8000- 8000+
TA=B29+C29+D29=24500 16000 8000 500
Eq.pur on credit 5000+
TA 29500 16000 13000 500
500- 500+
TA 29500 15500 13000 500 500
Adv expen -750
TA 28750 14750 13000 500 500
Salaries 3000-
TA 25750 11750 13000 500 500
2000+ 8000+
35750 13750 13000 500 500 8000
3000-
32750 10750 13000 500 500 8000
100-
32650 10750 13000 500 400 8000
10750 13000 500 400 8000
32650 10750 13000 500 400 8000

Income
Revenue
0
Income
Revenue Expenses
0 500 advertising
Equal loss
TR 0
Loss 500

Income If U Profit Add it to capital/E

Revenue Expenses If U Loss Deduct from C/E
0 3000 Salaries

Income
 Revenue Expenses
Commission 10000 0
Income
Revenue
0
 2.a The month’s rent of

3. aEquipment 3.a Equipment Stock= Shares= Securities

L+E
Creditors
CS/Equity Payable=Liability Credit Card Payable
25000
Loss because of rent Ex- 25000
500 24500
24500

24500

24500
5000+
29500 24500 5000
 29500
-750
28750 23750 5000
3000-
25750 20750 5000
10000+
35750 30750 5000
-3000
32750 30750 2000
100-
32650 30650 2000
1000- 1000+
32650 29650 2000 1000

Income
Expenses
500 Rent

500 TE

it to capital/E
uct from C/E

Income
Revenue Expenses
0 100 office supplies
Income
Expenses
1000 Mis.Expe
 An analysis of the transactions made by Acme Consulting for the month of July is
shown below.
Description
Cash Accounts Supplies Equipment Accounts Owners’ of
Receivable Inventory Payable Equity Transaction
1. $20,000 .................................................................................................. $20,000 Investment
2. $ 5,000 ................................................ $7,000 .......... $ 2,000 ......................
3. $ 1,000 ...................... $1,000 ............................................................................
4. $ 4,500 .................................................................................................. $ 4,500 Salaries
5. $ 5,000 .. $5,000 ................................................................................ $10,000 Revenues
6. $ 1,500 .......................................................................... $ 1,500 ......................
7. $ 1,000 .. $1,000 ..................................................................................................
8. $ 750 .................................................................................................. $ 750 Rent
9. $ 500 .................................................................................................. $ 500 Utilities
10. ............................................................................................ $ 200 ...... $ 200 Travel
11. .......................................... $ 200 .......................................................... $ 200
Chapter One The Nature and Purpose of Accounting 21
Anthony−Hawkins−Merchant:
Accounting: Text and
Cases, Tenth Edition
I. Financial Accounting 1. The Nature and Purpose
of Accounting
28 © The McGraw−Hill
Companies, 2001
22 Part One Financial Accounting
Required:
a. Explain each transaction.
b. Prepare a balance sheet as of the end of the month.
c. Prepare an income statement for the month (ignore taxes).
d. Explain the changes in the Cash account.
e. Explain why the change in the Cash account and the month’s income are
not the same.An analysis of the transactions made by Acme Consulting for the month of July is
shown below.
Description
Cash Accounts Supplies Equipment Accounts Owners’ of
 During the month of June, Bon Voyage Travel recorded the following transactions:
1. Owners invested $25,000 in cash to start the business. They received common stock.
2. The month’s rent of $500 was paid in cash.
$500 was pre paid in cash.
3. Equipment costing $8,000 was bought for cash
costing $5,000 was bought on credit.
4. $500 was paid for office supplies.
5. Advertising costing $750 was paid for with cash.
6. Paid $3,000 employee salaries in cash.
7. Earned travel commissions of $10,000 of which $2,000 was received in cash.
8. Paid $3,000 of the $5,000 owed to the equipment supplier.
9. Used $100 of the office supplies.
10. Charged $1,000 of miscellaneous expenses on the corporate credit card.
11.Required:
a. Prepare an analysis of the month’s transactions using the same tabular format
as shown in Problem 1–4 (ignore taxes).
b. Prepare a balance sheet as of the end of the month.
c. Prepare an income statement for the month.
d. Explain the changes in the Cash account.
e. Explain why the change in the Cash account and the month’s income are
not the same.

Debtors
Cash Equipment Pre-paid rent Office supplies Receivables
Capital 25000+
Rent 500-
Pre Paid Rent 500- 500
Eq.pur on cash 8000- 8000+
Eq.pur on credit 5000+
500- 500+
Adv expen -750
Salaries 3000-
2000+ 8000+
3000-
100-
32650 10750 13000 500 400 8000

Income Statement for the enti

Revenue
Commission 10000
Income
Revenue Expenses
0 750 advertising
Equal loss
TR 10000
Profit 4650

Income If U Profit Add it to capital/E

Revenue Expenses If U Loss Deduct from C/E
0 3000 Salaries

Income
Revenue Expenses
Commission 10000 0
Income
Revenue
0
 2.a The month’s rent of

3. aEquipment 3.a Equipment Stock= Shares= Securities

L+E
Creditors
CS/Equity Payable=Liability Credit Card Payable
Loss because of rent Ex- 25000
500 24500

5000+

-750
3000-
10000+
-3000
100-
 1000- 1000+
32650 29650 2000 1000
Balance sheet as at the end of the period
Income Statement for the entire Period Assets Liabilities and Equity
Expenses Cash 10750 Equity 25000
500 Rent Equipment 13000 Add Profit 4650
750 advertising Pre-Paid Rent 500 Total Equity
3000 Salaries Officie Supplies 400 Equipment Payables
100 office supplies Receivables 8000 Credit card Payables
1000 Mis.Expe
5350 TE Total Assets 32650 Total Liabilities and Equity

it to capital/E
uct from C/E

Income
Revenue Expenses
0 100 office supplies

Income
Expenses
1000 Mis.Expe
eriod

29650
2000
1000

32650