ABC Inc builds and sells single-family homes. The company had the following tran
ID: 2523128 • Letter: A
Question
ABC Inc builds and sells single-family homes. The company had the following transactions during Q1 2016 period that ended on March 31, 2016:
Purchased a single-family home on January 10, 2016 which it plans to renovate and resell. The home was purchased for $200,000 cash.
Purchased $5,000 worth of building materials at Home Depot to be used in the renovation. The purchased was paid with cash.
Hired a contractor to perform the renovation of the house. The renovation was completed on February 10, 2016 and the contractor billed ABC Inc $10,000 for this renovation. The amount was not paid as at the end of Q1 2016.
Purchased general office supplies of $1,000 cash during Q1 2016.
Sold the home for $300,000 cash on March 30th 2016.
At the beginning of the quarter (1/1/16), ABC Inc Balance Sheet has only $300,000 in Cash and $300,000 in Owners’ Equity.
Create a transaction table for the above events (remember you must include the accounts you debit and credit).
Create ABC Inc Balance Sheet at the end of Q1 2016.
Explanation / Answer
1) Transaction Table
4,00,000
10,000
Transaction Assets Capital +Liability Cash Material Renovaton Charge Office Supply Family Home Owners Equity Creditors Opening Cash Balance & Owners Equity +300000 +300000 Purchase of Single Family home by Cash -200000 +200000 Purchase of building material by cash -5000 +5000 Renovation charges to contractor +10000 +10000 Purchase of general office supplies by Cash -1000 +1000 Sale of Home by Cash +300000 -200000 +100000 TOTAL 3,94,000 5,000 10,000 1,000 -4,00,000
10,000