Modern Designer Company Is a Sole Proprietorship

question 243

Essay

Modern Designer Company is a sole proprietorship.The transactions for the first month of operations are as follows:
• On June 1,2019,the owner,Cindee Litfin,contributed $25,000 cash to the business in exchange for
capital.
• On June 2,the company rendered services to three clients on account with total revenues earned of $9,000.
• On June 5,the company incurred an advertising expense on four different web sites and promised to pay a total of $1,200 at a later date.
• On June 13,Modern Designer purchased $1,000 worth of office supplies for cash.(The supplies are not used by June 30.)
• On June 22,it received $2,000 on account from a client and deposited it into the business account.
• On June 23,it incurred $1,300 for a legal expense and paid cash.
• On June 30,Modern Designer made a payment of $500 to one of the web sites that it owed for advertising provided earlier in the month.
• No withdrawals were made during the month.
Required:
1.Prepare a transaction analysis of the transactions.Determine the effects of the transactions on the accounting equation.
2.Prepare an income statement and a statement of owner's equity for the month ended June 30,2019.
3.Prepare a balance sheet at June 30,2019.

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Definitions:

Conditioned Response

A learned response to a previously neutral stimulus that has been repeatedly presented alongside an unconditioned stimulus.

Permanent Change

An alteration or transformation that is lasting and not reversible over time.

Nerve Fiber Patterns

The arrangement or distribution of nerve fibers within a specific area of the nervous system.

Physical Changes

Alterations in the physical state or appearance of a substance or organism that do not involve a change in its composition or identity.