Jose Loder established Bronco Consulting on August 1, 2019. The effect of each transaction and the balances after each transaction for August follow:

Jose Loder established Bronco Consulting on August 1, 2019. The effect of each transaction and the balances after each transaction for August follow:

Assets 5Liabilities 1 Owner’s Equity Receivable + Supplies = Accounts   Payable + Jose Loder, Capital − Jose Loder, Drawing + Fees Earned − Salaries Expense − Rent Expense − Auto Expense − Supplies Expense − Misc. Expense a. +75,000 +75,000 b. +9,000 +9,000 Bal.  75,000 9,000 9,000    75,000 c. +92,000                               +92,000 Bal.   167,000 9,000 9,000   75,000   92,000 d.  –27,000                                –27,000 Bal. 140,000 9,000 9,000    75,000   92,000 –27,000 e. –6,000                 –6,000 Bal.   134,000 9,000       3,000    75,000   92,000 –27,000 f.                   +33,000 +33,000 Bal. 134,000 33,000 9,000       3,000    75,000  125,000 –27,000 g.  –23,000                           –15,500 –7,500 Bal. 111,000 33,000 9,000       3,000    75,000  125,000 –27,000 –15,500 –7,500 h.    –58,000                                 –58,000 Bal. 53,000 33,000 9,000       3,000    75,000  125,000 –58,000 –27,000 –15,500 –7,500 i.                   –6,100–6,100 Bal.   53,000 33,000 2,900       3,000    75,000  125,000 –58,000 –27,000 –15,500 –6,100 –7,500 j. –15,000–15,000 Bal.    38,000    33,000      2,900      3,000    75,000 –15,000  125,000 –58,000 –27,000 –15,500 –6,100 –7,500

Instructions

1. Prepare an income statement for the month ended August 31, 2019.

2. Prepare a statement of owner’s equity for the month ended August 31, 2019.

3. Prepare a balance sheet as of August 31, 2019.

4. (Optional) Prepare a statement of cash flows for the month ending August 31, 2019.

Answer:

1.

Fees earned$125,000

Expenses:

Salaries expense$58,000

Rent expense27,000

Auto expense15,500

Supplies expense6,100

Miscellaneous expense7,500

Total expenses114,100

Net income$ 10,900

2.

Jose Loder, capital, August 1, 2019$ 0

Investment on August 1, 2019$ 75,000

Net income for August10,900

Withdrawals(15,000)

Increase in owner’s equity70,900

Jose Loder, capital, August 31, 2019$70,900

3.

Cash$38,000

Accounts receivable33,000

Supplies2,900

Total assets$73,900

Accounts payable$ 3,000

Jose Loder, capital70,900

Total liabilities and owner’s equity$73,900

4. (Optional)

Cash flows from operating activities: 

Cash receipts from customers$ 92,000

Cash payments for expenses and payments to

creditors*(114,000)

Net cash flow used for operating activities$(22,000)

Cash flows from investing activities0

Cash flows from financing activities:

Cash receipt of owner’s investment $ 75,000

Cash withdrawal by owner(15,000)

Net cash flow from financing activities60,000

Net increase in cash and August 31, 2019, cash balance $ 38,000

* $27,000 + $6,000 + $23,000 + $58,000; these amounts are taken from the cash column shown 

in the problem.