Question 4

Jeff Ground is the manager/owner of a landscaping business named Ground Rules. The following summarized Ground Rules’ financial position on October 01, 2018:

    Accounts                         Accounts Owner’s

Cash + Receivable Supplies  + Land + Payable  + Equity

Bal. 35,000 20,000         100,000         45,000     110,000

Ground Rules transacted the following during October 2018:

a. Jeff Ground received a $ 10,000 inheritance cheque, and he deposited the cheque into Ground Rules’ bank account.

b. Ground Rules collected $ 15,000 of its accounts receivable opening balance.

c. Ground Rules paid the opening balance of its accounts payable.

d. Ground Rules did some landscaping for a client and invoiced the client $ 25,000.

e. Ground Rules purchased $ 7,000 supplies on account.

f. Ground Rules incurred the following business expenses:

o Paid $ 5,000 for equipment rental during October 2018

o Paid $ 3,000 for truck repairs during October 2018

g. Ground Rules received $ 10,000 cash for yard work done on a huge job site.

h. Jeff Ground needed a vacation, so he withdrew $ 4,000 from Ground Rules’ bank account.

i. Jeff Ground returned from his vacation. As he only used $ 2,000 of the $ 4,000 vacation money that he withdrew from the business, he deposited the remaining $ 2,000 into Ground Rules’ bank account.

Required:

A. Complete the transaction sheet for Ground Rules using Exhibit 1-11, Panel B: Analysis of Transactions from page 20 in your textbook as an example.

B. Prepare Ground Rules’ income statement at October 31, 2018.

C. Prepare Ground Rules’ statement of owner’s equity and balance sheet at October 31, 2018.