Here is an example to record the owner’s investment to start the business:
‘ Cash 54,000.
o Common stock 54,000.
Use the following account titles for this scenario:
‘ Accounts:
o Assets:
? Cash.
? Accounts Receivable.
? Prepaid Rent.
? Office Equipment.
? Automobiles.
o Liabilities:
? Accounts Payable.
? Interest Payable.
? Note Payable.
o Owner’s Equity:
? Common stock.
o Expenses:
? Automobile Expense.
? Rent Expense.
? Utilities Expense.
? Salaries Expense.
? Interest Expense.
? Telephone Expense.
o Revenues:
? Service Revenue.
‘ Transactions:
1. Justine Malone invested $54,000 in cash to start the business.
2. Paid $3,000 for 3 month’s rent.
3. Bought a used automobile for the firm for $16,000 in cash.
4. Performed services for $3,000 in cash.
5. Paid $400 for automobile repairs.
6. Performed legal services for $3,750 on credit.
7. Borrowed $25,000 from the local bank to help expand his business.
8. Purchased office chairs for $2,100 on credit.
9. Received $1,800 from credit clients.
10. Paid $1,000 on account to reduce the amount owed for the office chairs (purchased in #8).
11. Issued a check for $560 to pay the monthly utility bill.
12. Purchased office equipment for $8,400. Paid half in cash; the remainder to be paid in 30 days.
13. Issued a check for $5,680 to pay salaries.
14. Performed legal services for $1,850 in cash.
15. Performed legal services for $2,600 on credit.
16. Collected $1,600 on accounts receivable from charge clients.
17. One month’s worth of rent (paid in #2 above) has expired.
18. One month’s interest $145 accrued on the note payable (from number 7 above
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