At the end of her first year of university, Nola Lam decided that she should start a business to help finance her education, so she set up her own courier service. She invested savings of $1,300 in the company, which she called Wroad Wrunner Ltd. In addition, her parents lent the company $4,300 to help it get started. Since this was a business venture, Nola insisted on paying interest on this loan, and her parents agreed to charge a rate of 6% per year.
Nola then negotiated the purchase of a used car for the business for $7,800. The company made a down payment of $3,000 on the car, and financed the remainder of the purchase price at an interest rate of 9% per year. Due to all of the kilometres that would be put on the car while it was used in the courier business, Nola estimated that the car could be sold at the end of the summer for $6,300.
Wroad Wrunner began operations on May 1, and continued until August 31. Although she did not keep any formal accounting records, at the end of the summer Nola put together the following additional information related to the business:
| 1. | During the summer, the company made payments of $624 on the car, which included interest of $144 and principal of $480. | |
| 2. | No payments (of either interest or principal) were made on the loan from her parents. | |
| 3. | Nola paid herself a salary of $1,600 per month for the four months that the business operated. | |
| 4. | Payments for other operating costs (including advertising, insurance, and gas) totalled $9,500. In addition, there were unpaid bills totalling $100 at the end of August. | |
| 5. | Courier charges collected from customers totalled $21,000. In addition, customers still owed $500 for services performed in the last two weeks of August. | |
| 6. | After the close of business on August 31, there was a balance of $6,994 in the company’s bank account, plus a “float” of $82 in the car. |
| Assets | Liabilities | Shareholders’ Equity | ||||||||||||||||
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| Trans. | Cash | Accounts Receivable | Car | Accounts Payable | Interest Payable | Note Payable (Parents) | Loan Payble (Car) | Common Shares | Retained Earnings | |||||||||
| Investment | $Enter a dollar amount. | $Enter a dollar amount. | $Enter a dollar amount. | $Enter a dollar amount. | $Enter a dollar amount. | $Enter a dollar amount. | $Enter a dollar amount. | $Enter a dollar amount. | $Enter a dollar amount. | Select an option. | ||||||||
| Par. Loan | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Select an option. | ||||||||
| Purch. Car | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Select an option. | ||||||||
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| 2. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Select an option. | ||||||||
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| 5. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Select an option. | ||||||||
| 6. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Enter a dollar amount. | Select an option. | ||||||||
| Total | $Enter a total amount. | $Enter a total amount. | $Enter a total amount. | $Enter a total amount. | $Enter a total amount. | $Enter a total amount. | $Enter a total amount. | $Enter a total amount. | $Enter a total amount. | |||||||||
| Wroad Wrunner Ltd. Statement of Income Choose the accounting period. |
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| Select an income statement item. | $Enter a dollar amount. | |||
| Select an opening section name.: | ||||
| Select an income statement item. | $Enter a dollar amount. | |||
| Select an income statement item. | Enter a dollar amount. | |||
| Select an income statement item. | Enter a dollar amount. | |||
| Select an income statement item. | Enter a dollar amount. | |||
| Select an income statement item. | Enter a dollar amount. | |||
| Select a closing section name. | Enter a total amount for this section. | |||
| Select closing name for this statement. | $Enter a total net income or loss amount. | |||
| Wroad Wrunner Ltd. Statement of Financial Position Choose the accounting period. |
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| Select an opening section name. | ||||
| Select a balance sheet item. | $Enter a dollar amount. | |||
| Select a balance sheet item. | Enter a dollar amount. | |||
| Select a balance sheet item. | Enter a dollar amount. | |||
| Select a closing section name for this part of the statement of financial position. | $Enter a total amount for this part of the statement of financial position. | |||
| Select an opening name for section one. | ||||
| Select a balance sheet item. | $Enter a dollar amount. | |||
| Select a balance sheet item. | Enter a dollar amount. | |||
| Select a balance sheet item. | Enter a dollar amount. | |||
| Select a balance sheet item. | Enter a dollar amount. | |||
| Select a closing name for section one. | $Enter a total amount for this section of the statement of financial position. | |||
| Select an opening name for section two. | ||||
| Select a balance sheet item. | Enter a dollar amount. | |||
| Select a balance sheet item. | Enter a dollar amount. | |||
| Select a closing name for section two. | Enter a total of the two previous amounts. | |||
| Select a closing name for this part of the statement of financial position. | $Enter a total amount for this part of the statement of financial position. | |||
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