Problemsteve sims started a consulting business on january, Ask an Expert

Accounting

Problem:

Steve Sims started a consulting business on January 1, 2012, and the business engaged in the following transactions during the year:

Issued $20,000 of common stock for cash
Delivered services on account, $200,000
Incurred $127,000 of operating expense, paid $57,000 cash, the rest on account
Collected $165,000 of the revenue that was previously recorded on account
Obtained a bank loan of $25,000 to purchase a truck

Required:

Question 1: Write the accounting equation.

Question 2: Show the effects of the above transactions on the accounting equation.

Question 3: Prepare an income statement for 2012. Use proper form and be sure to show your calculations.

Note: Please provide step by step solution.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91165000

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