E1-8

1. E1-8 A Increase asset (Cash) Increase owner’s equity (Capital) B Increase asset (Supplies) Decrease asset (Cash) C Increase asset (Accounts Receivable) Increase owner’s equity (Rental Revenue)

2. D Increase asset (Office Furniture) Increase liability (Accounts Payable) E Increase asset (Cash) Decrease asset (Accounts Receivable) F Decrease asset (Cash) Decrease liability (Accounts Payable)

3. G Increase asset (Cash) Decrease asset (Land) H Increase asset (Cash) Increase owner’s equity (Rental Revenue) I Decrease asset (Cash) Decrease owner’s equity (Rent Expense)

4. E1-11

5. E1-12

7. P1-2A 2

10. P1-5A

13. Result of operations: Net income of $47,000 • The owner increased the company’s capital. • Net income ($47,000) exceeded withdrawals by the owner ($32,000).This would make it easier to borrow because the business’s equity is growing.

14. Bellmead Auto Repair Income Statement Year Ended December 31, 20X8 Revenue: Service revenue $101,000 Expenses: Salary expense $42,000 Rent expense 8,000 Fuel expense 6,000 Insurance expense 4,000 Supplies expense 1,000 Total expenses 61,000 Net income $40,000

15. Bellmead Auto Repair Statement of Owner’s Equity Year Ended December 31, 20X8 Owner, capital, December 31, 20X7 $13,000 Add: Net income for the year 40,000 53,000 Less: Withdrawals by owner (36,000) Owner, capital, December 31, 20X8 $17,000

16. Bellmead Auto Repair Balance Sheet December 31, 20X8 ASSETS LIABILITIES Cash $16,000 Accounts payable $ 8,000 Accounts receivable 7,000 Supplies 2,000 OWNER’S EQUITY Owner, capital 17,000 Total liabilities and Total assets $25,000 owner’s equity $25,000