Venice Company began its operation on Jan 1, 2013. During 2013, it had the follo

Question

Venice Company began its operation on Jan 1, 2013. During 2013, it had the following cash transactions: The owners invested $10,000 in the business. Provided services to customers for $6,000. Borrowed $5,000 from the bank Incurred $2,500 in expenses Paid $1,500 dividends to owners. Required: Describe the above transactions in whichever is more comfortable for you: Journal entries, T accounts or Transaction equation format provided below: Event: Assets = Liabilities + Share capital (or common stock) 10,000 + Retained earnings Prepare an income statement, statement of shareholder's (stockholder's) equity, statement of financial position (balance sheet).

Explanation / Answer

Journal Entries Date Description Debit $ Credit $ 1 Cash 10,000 Owners Equity 10,000 ( Owner Invested 10,000 in the company) 2 Cash 6000 To service Revenue 6000 ( Being Service provided to customer) 3 Cash 5000 To Borrowing 5000 ( Being Cash Borrowed from bank) 4 Expenses 2500 To Cash 2500 ( Being expenses was incured) 5 Devidend 1000 To cash 1000 Income statement Amount In $ Revenue Service to customer 6000 Less: Expenses 2500 Devidend Paid 1000 Net Income 2500 Cash Owners Equity 10,000 Expenses 2500 Service to customer 6000 Devided 1000 Bank borowingd 5000 Balance 17500 21,000 21000 Owners Equity Cash 10,000 Borrowings Cash 5000 Balance sheet Equity Onwer Equity 10000 Add: Cash 17500 Net Income 2500 Borrowing 5000

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