Juston Concerts inc. was organized on May 1, 2010, by two students majoring in education_ The two entrepreneurs provided entertainment for children's birthday parties to supplement their college career. The following transactions occurred during the first month of operations:
May 1: Received contribution of $6,000 from each of the two principal owners of
the new business in exchange for shares of stock.
May 1: Purchased lighting equipment for $300 on an open account. The company has
30 days to pay for the equipment.
May 5: Registered as a vendor with the city and paid the $25 monthly fee.
May 9: Purchased an event tent to set up at parties for $2,400 cash.
May 10: Purchased $100 in miscellaneous supplies on account. The company has
30 days to pay for the supplies.
May 15: Paid a $75 bill from local printer for advertisement signs.
May 17: Customers paid for services with cash of $1,500.
May 24: Billed the local park district $800 entertainment provided to a summer camp.
The park district is to pay one-half of the bill within five working days and the rest within 30 days.
May 29: Received 50% of the amount billed to the park district. May 30: Customers paid cash for parties of $2,000.
May 30: Paid wages of $300 to a friend who helped over the weekend.
May 31: Paid the balance due on the supplies.
Required
1. Prepare a table to summarize the preceding transactions as they affect the accounting equation. Use the following format. Identify each transaction with the date.
|
Assets =
|
Liabilities +
|
Stock. Equity 1
|
|
Date
|
Cash
|
Accts. Rec. _...
|
Equipment
|
Supplies
|
Accts. Pay.
|
Cap.
Stock
|
Ret.
Earn.
|
2. Prepare an income statement for the month ended May 31, 2010.
3. Prepare a classified balance sheet at May 31, 2010.
4. Why do you think the two students decided to incorporate their business rather than operate it as a partnership?a