PR 1-3A Financial statements
Heidi Fritz established Freedom Financial Services on March 1, 2012. Freedom Financial Services offers financial planning advice to its clients. The effect of each transaction and the balances after each transaction for March are shown below.
| Assets | = Liabilities + | Owner’s Equity | ||||||||||
| Heidi | Heidi | |||||||||||
| Accounts | Accounts | Fritz, | Fritz, | Fees | Salaries | Rent | Auto | Supplies | ||||
| Cash | + Receivable | + Supplies | Payable | + Capital | – Drawing | + Earned | – Expense | – Expense | – Expense | – Expense | – Expense | |
| a. | + 45,000 | + 45,000 | ||||||||||
| b. | + 6,540 | + 6,540 | ||||||||||
| Bal. | 45,000 | 6,540 | 6,540 | 45,000 | ||||||||
| c. | –1,800 | – 1,800 | ||||||||||
| Bal. | 43,200 | 6,540 | 4,740 | 45,000 | ||||||||
| d. | + 84,000 | + 84,000 | ||||||||||
| Bal. | 127,200 | 6,540 | 4,740 | 45,000 | 84,000 | |||||||
| e. | –22,500 | –22,500 | ||||||||||
| Bal. | 104,700 | 6,540 | 4,740 | 45,000 | 84,000 | –22,500 | ||||||
| f. | -17,100 | –13,500 | –3,600 | |||||||||
| Bal. | 87,600 | 6,540 | 4,740 | 45,000 | 84,000 | –22,500 | –13,500 | –3,600 | ||||
| g. | -48,000 | -48,000 | ||||||||||
| Bal. | 39,600 | 6,540 | 4,740 | 45,000 | 84,000 | -48,000 | –22,500 | –13,500 | –3,600 | |||
| h. | –4,500 | –4,500 | ||||||||||
| Bal. | 39,600 | 2,040 | 4,740 | 45,000 | 84,000 | -48,000 | –22,500 | –13,500 | –4,500 | –3,600 | ||
| i. | + 34,500 | + 34,500 | ||||||||||
| Bal. | 39,600 | 34,500 | 2,040 | 4,740 | 45,000 | 118,500 | -48,000 | –22,500 | –13,500 | –4,500 | –3,600 | |
| j. | –15,000 | –15,000 | ||||||||||
| Bal. | 24,600 | 34,500 | 2,040 | 4,740 | 45,000 | –15,000 | 118,500 | -48,000 | –22,500 | –13,500 | –4,500 | –3,600 |
Instructions
1. Prepare an income statement for the month ended March 31, 2012.
2. Prepare a statement of owner’s equity for the month ended March 31, 2012.
3. Prepare a balance sheet as of March 31, 2012.
4. (Optional). Prepare a statement of cash flows for the month ending March 31, 2012.
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