2024 – Question 1 Ruddy Lewis operates a bike repair shop operating under the name R L Bike Repairs The balances

  

Question 1

Ruddy Lewis operates a bike repair shop operating under the name R.L. Bike Repairs. The balances of his accounts on April 1 of the current year were as follows:

Cash $10,800

Supplies  1,200

Machines  6,400

Accounts Payable  6,000

Capital  12,400

The following transactions were incurred for the month of April:

1. Paid wages of $700 for 1st pay period in the month

2. Paid creditors on account $4,000

3. Purchased a new machine on account for $3,100

4. Received $7,200 cash from customers for bike repairs service

5. Paid courier service expense $280

6. Paid $850 cash for wages for the 2nd pay period in the month.

7. Ruddy Lewis withdrew $500 cash for personal use (“drawings”)

8. Paid creditors on account $1,200

9. Inventory of supplies at end of the month (April 30) was $550

10. Received $3,500 cash from customers for bike repairs service

You are required to record the transactions in the form provided, showing the balances on each account at the end of each transaction cycle. Transaction 1 has been completed for you.

Question 1 continued

  

Assets = Liabilities + Owners   Equity

 

Balance April 1

+

Cash

+

Supplies

Machines

Accounts   Payable

Ruddy   Lewis, Capital

 

Balance (April 1) $10,800 $1,200

$6,400

$6,000

$12,400

 

Transaction Numbers

 

1

-700

0

0

0

-700

 

Balance

$10,100

$1,200

$6,400

$6,000

$11,700

 

2

 

Balance

$

$

$

$

$

 

3

 

Balance

$

$

$

$

$

 

4

 

Balance

$

$

$

$

$

 

5

 

Balance

$

$

$

$

$

 

6

 

Balance

$

$

$

$

$

 

7

 

Balance

$

$

$

$

$

 

8

 

Balance

$

$

$

$

$

 

9

 

Balance

$

$

$

$

$

 

10

 

Balance,   April 30

$

$

$

$

$

 

 

              

Short Questions

1. Kevin Foster begins business by investing $20,000 in cash, equipment valued at $60,000, and $5,000 worth of supplies. What is the equity of the company? Show all workings in an acceptable format. 

2. If Kevin Foster included $30,000 in notes payable (treated as part of liabilities), what is the amount of the owner’s equity account? Incorporate the information from the previous question (Question 1, above).