The Following Events Are for Fun Travel Services for the Year

question 137

Essay

The following events are for Fun Travel Services for the year 2012,the first year of operations.Assume that all transactions involve the receipt or payment of cash.
1)The business acquired $20,000 from stock issued to owners.
2)Creditors loaned the company $7,000.
3)The company provided services to its customers and received $35,000.
4)The company paid expenses amounting to $23,000.
5)Purchased land for $9,000.
6)The company paid a dividend of $3,000 to its owners.
Required:
a)Show the effects of the above transactions on the accounting equation.Use appropriate elements and account headings.
b)Prepare a balance sheet and income statement for the year 2012.

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Definitions:

Uncertainty

A situation where the outcomes or consequences of an action, decision, or event are unknown.

Incentive

A factor, often a reward or a penalty, that motivates individuals or organizations to perform certain actions or behave in a desired way.

Loanable Funds

Funds available for borrowing in the financial market, influenced by interest rates and savings.

Interest Rate

The fee, represented as a percentage of the principal amount, that a lender imposes on a borrower for the utilization of assets.