haircutting business | Accounting homework help

After several months of planning, Jasmine Worthy started a haircutting business called Expressions. The following events occurred during its first month.

a. On August 1, Worthy invested $3,000 cash and $15,000 of equipment in Expressions.

b. On August 2, Expressions paid $600 cash for furniture for the shop.

c. On August 3, Expressions paid $500 cash to rent space in a strip mall for August.

d. On August 4, it purchased $1,200 of equipment on credit for the shop (using a long-term note payable).

e. On August 5, Expressions opened for business. Cash received from haircutting services in the first week and a half of business (ended August 15) was $825.

f. On August 15, it provided $100 of haircutting services on account.

g. On August 17, it received a $100 check for services previously rendered on account.

h. On August 17, it paid $125 to an assistant for hours worked during the grand opening.

i. Cash received from services provided during the second half of August was $930.

j. On August 31, it paid a $400 installment toward principal on the note payable entered into on August 4.

k. On August 31, Worthy withdrew $900 cash for personal use.

Required

1. Open the following ledger accounts in balance column format (account numbers are in parentheses): Cash (101); Accounts Receivable (102); Furniture (161); Store Equipment (165); Note Payable (240); J. Worthy, Capital (301); J. Worthy, Withdrawals (302); Haircutting Services Revenue (403); Wages Expense (623); and Rent Expense (640). Prepare general journal entries for the transactions.

2. Post the journal entries from (1) to the ledger accounts.

3. Prepare a trial balance as of August 31.

4. Prepare an income statement for August.

5. Prepare a statement of owner’s equity for August.

6. Prepare a balance sheet as of August 31.

7. Determine the debt ratio as of August 31.

8. In the coming months, Expressions will experience a greater variety of business transactions. Identify which accounts are debited and which are credited for the following transactions.

a. Purchase supplies with cash.

b. Pay cash for future insurance coverage.

c. Receive cash for services to be provided in the future.

d. Purchase supplies on account.