Cullen Beatty plans to start a consulting business—Cullen Consulting Services. I

Question

Cullen Beatty plans to start a consulting business—Cullen Consulting Services. In preparation to do this, on April 1, 2019, he invested $52,000 in cash and $21,000 in equipment, and opened an account at Office Plus by purchasing $1,700 in office supplies which is due by the end of the month. He then signed a one-year lease agreement on an office building for $6,400, paying the full amount in advance. Prepare a Balance Sheet for Cullen Consulting Services as of April 1, 2019, before he conducts any services.

Explanation / Answer

the following is the balance sheet

.................................Cullen Consulting Services

...................................Balance sheet...............

...................................April 1,2019............

note:

cash balance = $52,000 intial investment - $6400 paid towards lease => $45,600.

since supplies are purchased on accout : account payable to the tune of $1700 will be created.

Since lease of one year is paid in advance, it results is creation of prepaid rent..

capital of cullen beatty = cash + equipment => $52,000 + 21,000 =>$73,000.

Assets Liabilities Cash $45,600 Accounts payable $1,700 supplies $1,700 prepaid rent $6,400 Owner's equity Equipment $21,000 Cullen beaty capital $73,000 Total $74,700 $74,700

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