Lisa Vozniak started her own business, We Do Windows. She offers interior and exterior window cleaning for local area residents. Lisa rents a garage to store her tools and cleaning supplies and has a part-time assistant to answer the phone and handle third-story work. (Lisa is afraid of heights.) The transactions for the month of July are as follows: (a) On the first day of the month, Vozniak invested cash by making a deposit in a bank account for the business, $8,000. (b) Paid rent for July, $150. (c) Purchased a used van for cash, $5,000. (d) Purchased tools on account from Clean Tools, $600. (e) Purchased cleaning supplies that cost $300. Paid $200 cash and will pay the balance next month, $100. (f) Paid part-time assistant (wages) for first half of month, $100. (g) Paid for advertising, $75. (h) Paid two-year premium for liability insurance on van, $480. (i) Received cash from clients for services performed, $800. (j) Performed cleaning services for clients on account, $500. (k) Paid phone bill, $40. (l) Received cash from clients for window cleaning performed on account in transaction (j), $200. (m) Paid part-time assistant (wages) for last half of month, $150. (n) Made partial payment on tools purchased in transaction (d), $200. (o) Earned additional revenues amounting to $800: $600 in cash and $200 on account. (p) Vozniak withdrew cash at the end of the month for personal expenses, $100. Required: 1. Enter the above transactions in an accounting equation similar to the one illustrated below. Assets = Liabilities + Owner’s Equity (Items Owned) (Amounts Owed) (Owner’s Investment) + (Earnings) Cash + Accounts Receivable + Supplies + Prepaid Insurance + Tools + Van = Accounts Payable + Lisa Vozniak, Capital - Lisa Vozniak, Drawing + Revenues - Expenses Description 2. After transaction (p), compute the balance of each account. 3. Prepare an income statement for We Do Windows for the month of July 20--.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Lisa Vozniak started her own business, We Do Windows. She offers interior and exterior window cleaning for local area residents. Lisa rents a garage to store her tools and cleaning supplies and has a part-time assistant to answer the phone and handle third-story work. (Lisa is afraid of heights.) The transactions for the month of July are as follows:

(a)	On the first day of the month, Vozniak invested cash by making a deposit in a bank account for the business, $8,000.
(b)	Paid rent for July, $150.
(c)	Purchased a used van for cash, $5,000.
(d)	Purchased tools on account from Clean Tools, $600.
(e)	Purchased cleaning supplies that cost $300. Paid $200 cash and will pay the balance next month, $100.
(f)	Paid part-time assistant (wages) for first half of month, $100.
(g)	Paid for advertising, $75.
(h)	Paid two-year premium for liability insurance on van, $480.
(i)	Received cash from clients for services performed, $800.
(j)	Performed cleaning services for clients on account, $500.
(k)	Paid phone bill, $40.
(l)	Received cash from clients for window cleaning performed on account in transaction (j), $200.
(m)	Paid part-time assistant (wages) for last half of month, $150.
(n)	Made partial payment on tools purchased in transaction (d), $200.
(o)	Earned additional revenues amounting to $800: $600 in cash and $200 on account.
(p)	Vozniak withdrew cash at the end of the month for personal expenses, $100.

Required:

1.	Enter the above transactions in an accounting equation similar to the one illustrated below.

Assets

Liabilities

Owner’s Equity

(Items Owned)

(Amounts Owed)

(Owner’s Investment)

(Earnings)

Cash

Accounts Receivable

Supplies

Prepaid Insurance

Tools

Van

Accounts Payable

Lisa Vozniak, Capital

Lisa Vozniak, Drawing

Revenues

Expenses

Description

2.	After transaction (p), compute the balance of each account.
3.	Prepare an income statement for We Do Windows for the month of July 20--.
4.	Prepare a statement of owner’s equity for We Do Windows for the month of July 20--.
5.	Prepare a balance sheet for We Do Windows as of July 31, 20--.