Abe Factor opened a new accounting practice called X-Factor Accounting and completed these activities during March 2020: March 1 Invested $50,000 in cash and office equipment that had a fair value of $12,000. 1 Prepaid $9,000 cash for three months’ rent for an office. 3 Made credit purchases of used office equipment for $6,000 and office supplies for $1,200. 5 Completed work for a client and immediately received $6,200 cash. 9 Completed a $4,000 project for a client, who will pay within 30 days. 11 Paid the account payable created on March 3. 15 Paid $3,000 cash for the annual premium on an insurance policy. 20 Received $1,500 as partial payment for the work completed on March 9. 22 Placed an order with a supplier for $4,800 of supplies to be delivered April 7. They must be paid for within 15 days of being received. 23 Completed work for another client for $2,850 on credit. 27 Abe Factor withdrew $3,600 cash from the business to pay some personal expenses. 30 Purchased $650 of additional office supplies on credit. 31 Paid $860 for the month’s utility bill. Prepare an income statement and statement of changes in equity for the month ended March 31, 2020, and a balance sheet at March 31, 2020.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter4: Completing The Accounting Cycle

Section: Chapter Questions

Problem 5CP

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Abe Factor opened a new accounting practice called X-Factor Accounting and completed these activities during March 2020:

March	1	Invested $50,000 in cash and office equipment that had a fair value of $12,000.
	1	Prepaid $9,000 cash for three months’ rent for an office.
	3	Made credit purchases of used office equipment for $6,000 and office supplies for $1,200.
	5	Completed work for a client and immediately received $6,200 cash.
	9	Completed a $4,000 project for a client, who will pay within 30 days.
	11	Paid the account payable created on March 3.
	15	Paid $3,000 cash for the annual premium on an insurance policy.
	20	Received $1,500 as partial payment for the work completed on March 9.
	22	Placed an order with a supplier for $4,800 of supplies to be delivered April 7. They must be paid for within 15 days of being received.
	23	Completed work for another client for $2,850 on credit.
	27	Abe Factor withdrew $3,600 cash from the business to pay some personal expenses.
	30	Purchased $650 of additional office supplies on credit.
	31	Paid $860 for the month’s utility bill.

Prepare an income statement and statement of changes in equity for the month ended March 31, 2020, and a balance sheet at March 31, 2020.

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