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Review Questions for Test #1

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Problem 2-4A: Preparing General Journal entries:

Abe Factor opened a new accounting practice called X-Factor Accounting and

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completed these activities during March 2020:

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Required Prepare General Journal entries to record the transactions.

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Solution: Problem 2-4A:

2020

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Cont’d Solution: Problem 2-4A:

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Preparing financial statements:

The amounts of the assets and liabilities of Leisure Travel at December 31, 2020, the

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end of the current year, and its revenue and expenses for the year are noted below.

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The capital of Robin Egan, owner, was $45,000 on January 1, 2020, the beginning of

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the current year. During the current year, Robin withdrew $7,500 and invested
$10,000.

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Accounts payable $ 6,250 Rent expense $12,500
Accounts receivable 21,150 Supplies 1,350

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Cash 100,000 Supplies expense 1,400

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Fees earned 125,000 Utilities expense 9,100
Miscellaneous expense 750 Wages expense 32,500

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Use the information above to prepare an income statement, a statement of changes
in equity and balance sheet.
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 Solution: Leisure Travel Agency
Income Statement
For the Year Ended December 31, 2020

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Leisure Travel Agency
Statement of Changes in Equity

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For the Year Ended December 31, 2020

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2020

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Leisure Travel Agency

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Balance Sheet
December 31, 2020
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