90.2K

Verified Solution

Link Copied!

Problem $6$

Melvin Dwight owns a small catering business called M$.$D$\text{'}$s Catering, At the beginning of the current month, the business had the following assets: cash $$2,500$; food invent ory $$500$; beverage inventory $$2,500$; office supplies $$200$; and delivery truck $$2,000.$ M$.$D$.\text{'}$s owed $$500$ to Lawrence Supply Co$.,$ and $$1,500$ on a note to First Auto Bank. On the first day of the month, M$.$D$.\text{'}$s Catering completed the following transactions:

a$.$ Melvin invested $$500$ more in M$.$D$.\text{'}$s Catering.

b$.$ Food costing $$250$ was purchased on account from Lawrence Supply Co$.$

c$.$ Twenty dinners were served to L&M Trucking Co$.$ Board of Directors, and L&M was C harged $$5\mathrm{.}50$ for each dinner. Cash was received from $L$&$M.$ The costs of food and bev erages served were $$40$ and $$15,$ respectively.

d$.$ Melvin paid $$20$ for repair work to the delivery truck. $($Note: This expenditure should be considered an expense.$)$

e$.$ Melvin paid J$.$D$.$ Hill $$15$ for labor services received.

f$.$ Melvin paid First Auto Bank $$450$ on account.

g$.$ Melvin withdrew $$300$ from the firm for personal use.

Required:

Arrange the asset, liability, and proprietorship titles in an expanded accounting equa tion like that shown in Table II in this chapter.

Enter the assets and liability of M$.$D$.\text{'}$s under the titles of the equation. Determine Me Ivin Dwight's equity and enter it under the title of Melvin Dwight, Capital.

Show by additions and subtractions the effects of each transaction on the elements of the equation. Show new totals after each transaction.

Answer & Explanation Solved by verified expert

See Answer