Analyze the effect of Davis Consulting\'s transaction on the account equation. Use the format of
exhibit 1-4, and include these headings: Cash: Accounts Receivable; Office supplies; Capital;
Davis, Withdrawals; Service Revenue; Rent Expends and Utilities Expense. Prepare the income
statement of Davis Consulting for the month ended December 31, 2014. Prepare the statement
of owner\'s equity for the month ended December 31, 2014. Prepare the balance sheet as of
December 31, 2014. Calculate the return on assets for Davis Consulting.
Solution
Income Statement
FOr the month ended 31st dec 2014
Statement Of Owners Equity
Balance Sheet
As on 31st dec 2014
Return on assts = Annual net income/Average total Assets
= 1046/23746 = 4.40%
Salary = 2055x11/30 = 754ParticularsAmount($)Amount($)RevenuesConsulting Fees2600Less
ExpenditureOffice Rent550Utilities Expense250Salary A/c7541554Excess of Revenue over
Expenditure1046.
Analyze the effect of Davis Consultings transaction on the account .pdf
1. Analyze the effect of Davis Consulting's transaction on the account equation. Use the format of
exhibit 1-4, and include these headings: Cash: Accounts Receivable; Office supplies; Capital;
Davis, Withdrawals; Service Revenue; Rent Expends and Utilities Expense. Prepare the income
statement of Davis Consulting for the month ended December 31, 2014. Prepare the statement
of owner's equity for the month ended December 31, 2014. Prepare the balance sheet as of
December 31, 2014. Calculate the return on assets for Davis Consulting.
Solution
Income Statement
FOr the month ended 31st dec 2014
Statement Of Owners Equity
Balance Sheet
As on 31st dec 2014
Return on assts = Annual net income/Average total Assets
= 1046/23746 = 4.40%
Salary = 2055x11/30 = 754ParticularsAmount($)Amount($)RevenuesConsulting Fees2600Less
ExpenditureOffice Rent550Utilities Expense250Salary A/c7541554Excess of Revenue over
Expenditure1046
