Mr. Madoff decides to form an animal shelter for dogs and cats. On May 1, (the Happiest day in my mom's life), he made the following transactions: 1. On 5/1, he invested $350,000.00 of his own funds to form Redemption Services, LLC. He also borrows $100,000.00 from Chase Bank and he deposits the cash into the business. He deposits all of the funds into the First Redemption Bank. 2. On 5/1, he paid $9,600.00 for insurance for 12 months. 3. On 5/1, he paid $21,000 for a security system on Account. The equipment has a 3-year useful life and a salvage value of $3,000.00. In addition, it costs $500.00 per month for the monitoring service. 4. On 5/2, he paid $3,000.00 for rent for the month. 5. On 5/3, he paid $1,500.00 for dog and cat food. 6. On 5/5, he bought $2,450.00 of pet supplies on Account. 7. On 5/10, he transfers $75,000.00 to Pope Francis Bank. 8. On 5/12, he transfers $1,000.00 to form a petty cash account. 9. On 5/14, he paid out $2,500.00 in wages to his employees. Employees are paid every two weeks. 10. On 5/15, his grand opening produced cash fees and contributions totaling $7,500.00 for professional services. In addition, he has sales of $2,500.00 placed with customer's Visa accounts. He will not collect payment from Visa for 15 days.
Mr. Madoff decides to form an animal shelter for dogs and cats. On May 1, (the Happiest day in my mom's life), he made the following transactions: 1. On 5/1, he invested $350,000.00 of his own funds to form Redemption Services, LLC. He also borrows $100,000.00 from Chase Bank and he deposits the cash into the business. He deposits all of the funds into the First Redemption Bank. 2. On 5/1, he paid $9,600.00 for insurance for 12 months. 3. On 5/1, he paid $21,000 for a security system on Account. The equipment has a 3-year useful life and a salvage value of $3,000.00. In addition, it costs $500.00 per month for the monitoring service. 4. On 5/2, he paid $3,000.00 for rent for the month. 5. On 5/3, he paid $1,500.00 for dog and cat food. 6. On 5/5, he bought $2,450.00 of pet supplies on Account. 7. On 5/10, he transfers $75,000.00 to Pope Francis Bank. 8. On 5/12, he transfers $1,000.00 to form a petty cash account. 9. On 5/14, he paid out $2,500.00 in wages to his employees. Employees are paid every two weeks. 10. On 5/15, his grand opening produced cash fees and contributions totaling $7,500.00 for professional services. In addition, he has sales of $2,500.00 placed with customer's Visa accounts. He will not collect payment from Visa for 15 days.
Chapter4: Gross Income: Concepts And Inclusions
Section: Chapter Questions
Problem 41P
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Transcribed Image Text:Mr. Madoff decides to form an animal shelter for dogs and
cats. On May 1, (the Happiest day in my mom's life), he made the
following transactions:
1. On 5/1, he invested $350,000.00 of his own funds to form
Redemption Services, LLC. He also borrows $100,000.00 from
Chase Bank and he deposits the cash into the business. He deposits
all of the funds into the First Redemption Bank.
2. On 5/1, he paid $9,600.00 for insurance for 12 months.
3. On 5/1, he paid $21,000 for a security system on Account.
The equipment has a 3-year useful life and a salvage value of
$3,000.00. In addition, it costs $500.00 per month for the
monitoring service.
4. On 5/2, he paid $3,000.00 for rent for the month.
5. On 5/3, he paid $1,500.00 for dog and cat food.
6. On 5/5, he bought $2,450.00 of pet supplies on Account.
7. On 5/10, he transfers $75,000.00 to Pope Francis Bank.
8. On 5/12, he transfers $1,000.00 to form a petty cash
account.
9. On 5/14, he paid out $2,500.00 in wages to his employees.
Employees are paid every two weeks.
10. On 5/15, his grand opening produced cash fees and
contributions totaling $7,500.00 for professional services. In
addition, he has sales of $2,500.00 placed with customer's Visa
accounts. He will not collect payment from Visa for 15 days.
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