Evan Jones Started a Sports Consulting Business and Completed the Following

question 127

Essay

Evan Jones started a sports consulting business and completed the following transactions during October, 2012:
1. Evan incorporated the business, Sports, Inc., and invested $15,000 for common stock.
2. Purchased a new computer on account, $2,000.
3. Purchased $1,000 of office supplies, paying cash.
4. Signed a football player to a contract and received service revenue of $8,000 on account.
5. Signed a hockey player to a contract and received service revenue of $3,000 cash.
6. Paid his secretary a salary of $2,500 for the month.
7. Paid the monthly rent of $1,000.
8. Collected cash from the football player on account, $8,000.
REQUIRED:
Set up T-accounts for Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Service Revenue, Rent Expense, and Salaries Expense. Post the transactions to the T-accounts and compute ending account balances.

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Definitions:

Operating Activities

Transactions and other events that are not investing or financing activities, relating to the primary operations of a business.

Financing Activities

Activities that result in changes in the size and composition of the equity capital and borrowings of a company.

Operating Activities

The day-to-day actions taken by a business, such as selling products, managing costs, and paying bills, that are essential to running the business and generating income.

Production

The process of creating, growing, manufacturing, or improving goods and services.