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20 November, 21:31

If an amount box does not require an entry, leave it blank.

a. In the T accounts, record the following transactions of Potter Pool Services for June, identifying each entry by number:

Potter invested $12,500 cash in the business.

Purchased supplies on account, $6,250.

Paid operating expenses, $5,500.

Billed clients for fees, $7,440.

Received cash from cash clients, $4,700.

Paid creditors on account, $1,400.

Received $3,100 from clients on account.

Withdrew $1,500 cash for personal use.

b. Prepare a trial balance as of June 30 for Potter Pool Servcies.

c. Assuming that supplies expense (which has not been recorded) amounts to $1,500 for June. determine the following:

(1) Net income for the month

(2) Stockholders' equity as of June 30.

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Answers (1)
  1. 20 November, 22:44
    0
    a. Record

    1.

    Cash $12,500 (debit)

    Capital $12,500 (credit)

    2.

    Inventories $6,250 (debit)

    Accounts Payable $6,250 (credit)

    3.

    Operating expenses $5,500 (debit)

    Cash $5,500 (credit)

    4.

    Accounts Receivables $7,440 (debit)

    Revenue $7,440 (credit)

    5.

    Cash $4,700 (debit)

    Revenue $4,700 (credit)

    6.

    Cash $3,100 (debit)

    Accounts Receivables $3,100 (credit)

    7.

    Capital $1,500 (debit)

    Cash $1,500 (credit)

    b. Trial Balance

    Debit Credit

    Cash ($12,500-$5,500-$1,500+$3,100+$4,700) $11,500

    Capital ($12,500-$1,500) $11,000

    Inventories $6,250

    Accounts Payable $6,250

    Operating expenses $5,500

    Accounts Receivables ($7,440 - $3,100) $4,340

    Revenue ($7,440+$4,700) $12,140

    c. (1) Net Income = $5,140

    c. (2) Stockholders' equity = $16,140

    Explanation:

    c. (1) Net Income

    Income = Revenue - Expenses

    = $12,140 - $5,500 - $1,500

    = $5,140

    c. (2) Stockholders' equity

    Stockholders' equity = Capital + Income

    = $11,000 + $5,140

    = $16,140
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