Truro Excavating Co., owned by Raul Truro, began operations in July and completed these transactions during that first month of operations.
July 1 R. Truro invested $80,000 cash in the company.
2 The company rented office space and paid $700 cash for the July rent.
3 The company purchased excavating equipment for $5,000 by paying $1,000 cash and agreeing to pay the $4,000 balance in 30 days.
6 The company purchased office supplies for $600 cash.
8 The company completed work for a customer and immediately collected $7,600 cash for the work.
10 The company purchased $2,300 of office equipment on credit.
15 The company completed work for a customer on credit in the amount of $8,200.
17 The company purchased $3,100 of office supplies on credit.
23 The company paid $2,300 cash for the office equipment purchased on July 10.
25 The company billed a customer $5,000 for work completed; the balance is due in 30 days.
28 The company received $8,200 cash for the work completed on July 15.
30 The company paid an assistant's salary of $1,560 cash for this month.
31 The company paid $295 cash for this month's utility bill.
31 R. Truro withdrew $1,800 cash from the company for personal use.
Required:
1. Arrange the following asset, liability, and equity titles in a table like Exhibit 1.9: Cash; Accounts Receivable; Office Supplies; Office Equipment; Excavating Equipment; Accounts Payable; R. Truro, Capital; R. Truro, Withdrawals; Revenues; and Expenses.
2. Use additions and subtractions to show the effects of each transaction on the accounts in the accounting equation. Show new balances after each transaction.
3. Use the increases and decreases in the columns of the table from part 2 to prepare an income statement, a statement of owner's equity, and a statement of cash flows each of these for the current month. Also prepare a balance sheet as of the end of the month. Analysis Component
4. Assume that the $5,000 purchase of excavating equipment on July 3 was financed from an owner investment of $5,000 cash in the business (instead of the purchase conditions described in the transaction).
Explain the effect of this change on total assets, total liabilities, and total equity.