Lynn Barry started her own consulting firm, Barry Consulting, on June 1, 2014. The following transactions occurred dur
Lynn Barry started her own consulting firm, Barry Consulting, on June 1, 2014. The following transactions occurred during the month of June:
June 1 sold her shares in Big Country Airlines for $7,000, which she deposited in her personal bank account.
1. Transferred $6,000 from her personal account to a business account in the name of Barry Consulting.
2. Paid $900 for office rent for the month.
3. Purchased $545 of supplies on account.
5. Paid $95 to advertise in the County News.
9. Received $3,275 for services provided.
12. Withdrew $600 for personal use.
15 Performed $5,000 of services on account.
17 Paid $1,800 for employee salaries.
21 Received $3,000 for services provided on account on June 15.
22 Paid for the supplies purchased on account on June 3.
25 Signed a contract to provide consulting services to a client for $5,500. Services will be performed and paid for in July.
26 Borrowed $5,500 from the bank and signed a note payable.
29 Used part of the cash borrowed from the bank on June 26 to purchase equipment for $2,150.
30 Paid $150 for telephone service for the month.
30 Received $2,500 from client for consulting to be provided in July.
(a) Prepare a tabular analysis of the effects of the above transactions on the accounting equation.
(b) Calculate profit and owner's equity for the month ended June 30.
(c) Prepare a balance sheet at June 30.
TAKING IT FURTHER How should Lynn determine which transactions should be recorded and which ones should not be recorded?