Jill Smith opens an apartment-locator business near a college campus. She is the sole owner of the proprietorship, which she names Campus Apartment Locators. During the first month of operations, July 2015, she engages in the following transactions: a. Smith invests $35,000 of personal funds to start the business.
b. She purchases on account office supplies costing $350.
c. Smith pays cash of $30,000 to acquire a lot next to the campus. She intends to use the land as a future building site for her business office.
d. Smith locates apartments for clients and receives cash of $1,900.
e. She pays $100 on the account payable she created in transaction (b).
f. She pays $2,000 of personal funds for a vacation.
g. She pays cash expenses for office rent, $400, and utilities, $100.
h. The business sells office supplies to another business for its cost of $150.
i. Smith withdraws cash of $1,200 for personal use.
Required
(a) Analyze the preceding transactions in terms of their effects on the accounting equation of Campus Apartment Locators. Use Figure 2-A-1 as a guide.
(b) Prepare the income statement and balance sheet of the business after recording the transactions.