TUTORIAL TEST 1

McGuire Company is a sole proprietorship. The financial transactions of McGuire Company for
the month of May, their first month of operations, are as follows:
• On May 1, 2019, Deborah McGuire, the owner, contributed $20,000 cash in exchange for
capital.
• On May 3, the company borrowed $5,000 from a creditor and executed a note payable with
the principal and interest to be due in one year.
• On May 7, the company purchased $15,000 of equipment for cash.
• On May 8, McGuire Company rendered service to a client and received $3,000 in cash.
• On May 12, the company incurred a repair expense of $1,800 and promised to pay the repair
contractor the following month.
• On May 18, the company rendered service to a new client in the amount of $8,000 on account,
as the client promised to pay the following month.
• At the end of May, Deborah McGuire withdrew $1,500 cash for personal use.
Required:
1. Prepare a transaction analysis of the transactions. Determine the effects of the transactions on
the accounting equation.
Assets = Liabilities + Owner's Equity
Accounts Accounts Notes McGuire McGuire, Service Repair
Date Cash + + Equipment = + + + + +
Receivable Payable Payable Capital Withdrawals Revenue Expense
2. Prepare an income statement and a statement of owner's equity for the month ending May 31,
2019 for McGuire Company.
3. Prepare a balance sheet at May 31, 2019.