Dynamic Services Inc. was organized on March 1 by two former college roommates. The corporation will provide computer tax services to small businesses. The following transactions occurred during the first month of operations:
uazsajx411hDynamic Services Inc. was organized on March 1 by two former college roommates. The corporation will provide computer tax services to small businesses. The following transactions occurred during the first month of operations:
| March Transactions: | ||
| March | 2 | Received contributions of $10,000 from each of the two principal owners in exchange for shares of stock. |
| 7 | Signed a two-year promissory note at the bank and received cash of $7,500. Interest, along with the $7,500, will be repaid at the end of the two years. | |
| 12 | Purchased miscellaneous supplies on account for $350, payment due in 30 days. | |
| 19 | Billed a client $2,000 for tax preparation services. According to an agreement between the two companies, the client is to pay 25% of the bill upon its receipt and the remaining balance within 30 days. | |
| 20 | Paid a $650 bill from the local newspaper for advertising for the month of March. | |
| 22 | Received 25% of the amount billed the client on March 19. | |
| 26 | Received cash of $1,400 for services provided in assisting a client in preparing its tax return. | |
| 29 | Purchased a computer system for $4,000 in cash. | |
| 30 | Paid $1,650 in salaries and wages for March. | |
| 31 | Received and paid $700 of gas, electric, and water bills. | |
Required:
| 1. | Prepare a table to summarize the preceding transactions as they affect the accounting equation. Identify each transaction with the date. |
| 2. | Prepare an income statement for the month of March. |
| 3. | Prepare a classified balance sheet at March 31. |
| 4. | From reading the balance sheet you prepared in part (3), what events would you expect to take place in April? |
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