Lita Lopez started Biz Consulting, a new business, and completed the following t

Question

Lita Lopez started Biz Consulting, a new business, and completed the following transactions during its first year of operations.

Lita Lopez invested $70,000 cash and office equipment valued at $10,000 in the company.

The company purchased an office suite for $40,000 cash.

The company purchased office equipment for $15,000 cash.

The company purchased $1,200 of office supplies and $1,700 of office equipment on credit.

The company paid a local newspaper $500 cash for printing an announcement of the office's opening.

The company completed a financial plan for a client and billed that client $2,800 for the service.

The company designed a financial plan for another client and immediately collected a $4,000 cash fee.

Lita Lopez withdrew $3,275 cash from the company for personal use.

The company received $1,800 cash as partial payment from the client described in transaction f.

The company made a partial payment of $700 cash on the equipment purchased in transaction d.

The company paid $1,800 cash for the office secretary's wages for this period.

Required:

1. Enter the amount of each transaction on individual items of the accounting equation. (Reductions in account balances should be indicated with a minus sign.)

2. Determine the company's net income.

Explanation / Answer

2)

Asset = Liabilites + Owners equity Owners capital + Retained earning Cash + Accounts receivable + Office supplies + Office equipment + Office suite = Accounts payable L capital - L Drawings Revenue - Expense a 70000 10000 80000 b -40000 40000 c 1200 1700 2900 d e 2800 2800 f 4000 4000 g -3275 3275 h 1800 -1800 g -700 -700 h -1800 1800 Total 30025 + 1000 + 1200 + 11700 + 40000 = 2200 + 80000 - 3275 + 6800 - 1800

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