Analyze transactions from the accounting equation; prepare the four financial statements; and calculate the current ratio. The following accounting equation worksheet shows the transactions for Blairstone Consulting& Advising Inc. for the first month of business, April 2009. (LO 3, 5)
|
Assets |
= |
Liabilities |
+ |
Shareholders Equity |
|||||
|
Cash |
Accounts receivable |
Supplies |
Accounts payable |
Note payable(5-year) |
Contributed capital |
Retained earnings |
|||
|
1 |
$3000 |
$3000 Common stock |
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|
2 |
11000 |
11000 |
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|
3 |
15000 |
15000 |
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|
4 |
2500 |
2500 Revenue |
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|
5 |
10000 |
10000 Revenue |
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|
6 |
(8000) |
8000 |
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|
7 |
1200 |
(1200) |
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|
8 |
(3400) |
(3400) |
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|
9 |
(3100) |
(3100) Expense |
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|
10 |
(500) |
(500) Dividends |
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Required
a. Analyze each transaction in the accounting equation worksheet and describe the underlying exchange that resulted in each entry.
b. Has the company been profitable this month? Explain.
c. Prepare an income statement for the month ended April 30, 2009.
d. Prepare a statement of shareholders’equity for the month ended April 30, 2009.
e. Prepare a statement of cash flows for the month ended April 30, 2009.
f. Prepare a balance sheet at April 30, 2009.
g. Calculate the current ratio at April 30. What does this ratio measure?