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 Jackie Knight”s Furniture Repairs, a corporation, for the first month of business November2 007.( LO 4,5,1)
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Assets |
= |
Liabilities |
+ |
Shareholders Equity |
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|
Cash |
Accounts receivable |
Supplies |
Accounts payable |
Long-term payable |
Common stock |
Retained earnings |
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|
1 |
$2000 |
$2000 Common stock |
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|
2 |
4000 |
4000 |
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3 |
(5000) |
(5000) Operating Expense |
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|
4 |
1500 |
1500 Service Revenue |
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|
5 |
8000 |
8000 Service Revenue |
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|
6 |
4000 |
4000 |
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|
7 |
6000 |
(6000) |
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|
8 |
(400) |
(400) |
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|
9 |
(3100) |
(3100) Salary Expense |
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|
10 |
(200) |
(200) 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 November 30″2007.
d. Prepare a statement f shareholders equity for the month ended ovember3 0,2007.
e. Prepare a statement of cash flows for the month ended November 30,2001 .
f. Prepare a balance sheet at November 30,2007 .
g. Calculate the current ratio at November 30,2007. What does this ratio measure?