Analyze the effect of business transactions on the basic accounting equation.

Business is booming for Dan Brown's home inspection business. He has been so busy the first month of business that he hasn't had time to keep up with his bookkeeping and has asked for your help. He has provided you with the detail regarding the following transactions:

Date

Transaction

Dec 4

First week of inspections. Inspected 3 homes.

Charged clients a total of $900. Received payment

From all clients at time of inspection.

Dec 7

Filled company truck with gasoline - paid cash, $43

Dec 11

Inspected 7 homes this week. Charged clients a

total of $2,100. Received payment of $1,500, billed

the remainder to clients.

Dec 15

Filled company truck with gasoline - paid cash, $43

Dec 18

Inspected 10 homes this week. Charged clients a

total of $3,000. Received payment of $2,400, billed

the remainder to clients.

Dec 18

Paid $350 for office supplies.

Dec 22

Purchased additional tools on company credit card, $475.

Dec 25

Inspected 6 homes this week. Charged clients a

total of $1,800. Received payment of $600, billed

the remainder to clients.

Dec 28

Paid $500 on company credit card bill. ($100 was interest)

Dec 30

Paid truck payment, $250 ($85 was interest).

Dec 30

Dan withdrew $2,000 from the business for personal use.

Dec 30

Received payment from clients, $1,800.

Individually:

1. Post the September, October, and November transactions (from previous task) in the ledger accounts.
2. Journalize the December transactions
3. Post the December transactions in the ledger accounts
4. Prepare a Trial Balance for December.

Group Portion:

* In a 1000-1250 word memo to Dan, discuss the business's performance for the first year of operation. Has his business been successful so far? Why/why not? What can he do to improve the performance of his business?

Use the following chart of accounts.

Account Number

Account Title

100

Cash

110

Accounts Receivable

120

Prepaid Insurance

130

Office Supplies

140

Books

150

Tools

160

Truck

210

Credit Card Payable

220

Truck Loan Payable

300

Dan Brown, Capital

310

Dan Brown, Drawing

400

Inspection Revenue

610

Training Expense

620

License Expense

630

Advertising Expense

640

Interest Expense

650

Gasoline Expense

Click below for templates for the General Journal, General Ledger accounts and Trial Balance.

Download Journal, General Ledger accounts and Trial Balance.

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