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Business · Accounting
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Wesley's Tree & Yard Service, Inc., a company that takes care of trees, lawns, and shrubbery of personal residences, engaged in the following transactions in October 2016:

Date

Description

Oct 1

Received $50,000 cash for shares of capital stock issued when company was organized.

2

Received marketing expense invoice for $500 due in 30 days

3

Borrowed $20,000 from the bank on a note to purchase a truck and trailer (Interest and principle payments are $500 per month and interest $50.)

4

Purchased $4,000 cash for equipment

5

Purchased $125 of supplies for cash

7

Received $2,500 cash for services

14

Invoiced a customer for $3,000 for services performed; customer agreed to pay in 10 days

15

Paid $1,500 for employee wages

24

Received $3,000 cash from customer who paid invoice due

31

Paid $550 to the bank for $500 principle against the note and $50 interest expense

31

Paid $1,000 for employee wages

  1. Prepare a summary of transactions (see worksheet). Use money columns headed Cash, Accounts Receivable, Equipment, Accounts Payable, Capital Stock, and Retained Earnings. Determine balances after each transaction to show that the basic accounting equation balances.
  2. Prepare an income statement as of October 31.
  3. Prepare a statement of retained earnings as of October 31.
  4. Prepare a balance sheet as of October 31. Assume no depreciation expense.
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