Question 1

Determine what accounts are affected by what amounts and indicate whether it is an increase (+), decrease (), or there is no effect (0) in each of the following cases.

Sept. 6             Invested $35,000 cash and $2,000 of supplies into the start-up of the business

Sept. 8             Received $21,000 cash for lawn care services provided to customers

Sept. 10           Purchased machinery on account for $18,500 from Sears Corporation

Sept. 12           Paid $3,750 for supplies bought

Sept. 15           Paid $17,500 for land acquired

Sept. 17           Paid $10,000 on account for the machinery previously purchased from Sears

Sept. 19           Paid telephone bill for $1,000

Sept. 21           Paid $1,500 for supplies

Sept. 21           Paid $3,500 for additional machinery

Sept. 22           Received $23,500 for services rendered

Sept. 26           Withdrew $10,000 cash for personal use

Sept. 30           The inventory of supplies showed a balance of $3,000 on hand

Instructions:

You are required to record the effect of each transaction in the table provided below.

Question 2

You have been recently appointed as the accountant for Gone Clear Company. Prepare an income statement based on the following transactions:

Service Revenue                     $190,000

Supplies Expense                     $  80,000

Salary & Wage                                    $  60,000

Administrative Expense          $  30,000

Miscellaneous Expense           $    5,000

Question 3

Based on Question 2 above (Gone Clear Company), what would the net income or net loss be if, in addition to the listed expenses, there was an additional $25,000 for office rent?

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