ACCT 211 Individual Learning Project Liberty University Solution

Question 1

Karla Tanner opened a web consulting business called Linkworks and recorded the following transactions in its first month of operations.

Apr. 1

Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock.

Apr. 2

The company prepaid $9,000 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in balance sheet accounts.

Apr. 3

The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days.

Apr. 6

The company completed services for a client and immediately received $4,000 cash.

Apr. 9

The company completed a $6,000 project for a client, who must pay within 30 days.

Apr. 13

The company paid $11,600 cash to settle the account payable created on April 3.

Apr. 19

The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts.

Apr. 22

The company received $4,400 cash as partial payment for the work completed on April 9.

Apr. 25

The company completed work for another client for $2,890 on credit.

Apr. 28

The company paid $5,500 cash in dividends.

Apr. 29

The company purchased $600 of additional office supplies on credit.

Apr. 30

The company paid $435 cash for this month’s utility bill.

a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.

b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy the policy's coverage began on April 1.

c) Office supplies on hand as of April 30 total $1,200.

d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.

e) The company has completed work for a client, but has not yet billed the $1,800 fee.

f) Wages due to employees, but not yet paid, as of April 30 total $2,600.

Question 2

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data.

Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2018. Owner Santana Rey contributed $32,000 to the business in exchange for additional stock in the first quarter of 2018 and has received $4,100 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)