SANFORD CONSULTING SERVICES, INC.
On October 1, 2014, Sanford Consulting Services, Inc. was started by James and a group of investors and during the month of October the company completed the following transactions.
On October 1, the investors deposited $6,000 of their own money into a checking account for the company in exchange for 2,000 shares of the company stock. James was hired as the manager and he used the company money to pay $500 for one month's rent and $480 for a one-year insurance policy.
James immediately purchased computer equipment, a fax and copy machine from Perry Company for $4,200. This equipment is expected to be used by the company for the next five years after which time any remaining value is considered to be negligible. James paid $600 on the equipment and signed a note promising monthly payments beginning November 1, 2014, of $300 plus interest on the unpaid balance figured at 12% annually.
To get the business started, James purchased advertisements in the local newspapers for $60. Then he bought office supplies from Baker Supplies for $396 on credit.
Business started off slowly, but on October 15, James deposited $900 consulting fees. Then he paid $250 of the amount owed to Baker.
At the end of the month, James deposited an additional $750 from consulting fees. He received but did not pay the current utility bill of $85. He counted his office supplies, since he had been using them in the business all month long, and found that he had approximately $175 of supplies still on hand. Further, James prepared to send bills totaling $550 to his customers for consulting services already performed.
James withdrew $450 cash from the company bank account for his salary. Then, he paid the owners a dividend of $100 from the company checking account. Assume that all cash transactions, unless otherwise stated, are to and from the company checking account.
Please answer each of the five questions online. For question 1, you may answer with just a final amount.
For questions 2 to 5, please show and label your work. I am interested in the details, not in the final amount at this time.
1. How much cash does Sanford Consulting Services, Inc. have at October 31, 2014?
2. How much has Sanford Consulting Services, Inc. earned for the month of October in terms of gross revenues?
3. What were Sanford's expenses for running the business during the month of October, 2014?
4. Sanford Consulting Services, Inc. is applying to its banker for a mortgage to purchase a small office building.
The banker wants to know how much Sanford owes to others before it makes its loan decision. What are Sanford's debts as of October 31, 2014?
5. In filling out the loan application, the banker asks James for Sanford's assets. What assets, other than cash, does Sanford have as of October 31, 2014?