The Following Events Are for Leisure Travel Services for the Year

question 24

Essay

The following events are for Leisure Travel Services for the year 2013, the first year of operations. Assume that all transactions involve the receipt or payment of cash.
1) The business acquired $40,000 from stock issued to owners.
2) Creditors loaned the company $17,500.
3) The company provided services to its customers and received $55,400.
4) The company paid expenses amounting to $43,250.
5) The company purchased land for $29,000.
6) The company paid a dividend of $5,000 to its owners.
Required:
a) Show the effects of the above transactions on the accounting equation (use appropriate element and account headings). For those events that affect retained earnings, indicate in a separate column the appropriate temporary account. b) Prepare an income statement and balance sheet for the year 2013.

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Definitions:

Production Capability

The maximum output or production level that a company can achieve using its current resources and technologies.

Green Enterprises

Refers to businesses that focus on products or services that are environmentally friendly, aiming to have a positive impact on the planet.

Custom Cabinets

Tailored storage or shelving units designed specifically to fit the preferences and spatial requirements of a client's home or office.

Net Present Value

A method for evaluating the profitability of an investment, calculating the difference between the present value of cash inflows and outflows.