Frannie's Dance Studio accounting records reflect the following account balances at January 1, 2017.
$\begin{array} { l r l r }
\text { Cash } & \$ 100,000 & \text { Supplies } & \$ 4,000 \
\text { Capital Stock } & 50,000 & \text { Retained Earnings } & 54,000
\end{array}$
During 2017, the following transactions occurred:
1. On February 1, rented a small studio for one year. Paid $6,000 cash.
2. On November 1, received $1,200 cash for dance lessons to be provided evenly over November, December, and January.
3. By December 31, used $3,000 of the supplies
4. At December 31, accrued $3,000 in wages and salaries.
5. During the year, paid $20,000 in cash for wages and salaries.
6. During the year, earned $40,000 cash in dance lesson revenue.

Required

A. Determine the effect on the accounting equation of the preceding transactions. Create a table to reflect the increases and decreases in accounts.
B. Prepare an income statement for Frannie's Dance Studio for 2017. Ignore income tax effects.

C. Prepare a classified balance sheet for Frannie's Dance Studio at December 31,2017.

Question

Frannie's Dance Studio accounting records reflect the following account balances at January 1, 2017.
 $\begin{array} { l r l r } 
\text { Cash } & \$ 100,000 & \text { Supplies } & \$ 4,000 \
\text { Capital Stock } & 50,000 & \text { Retained Earnings } & 54,000
\end{array}$
During 2017, the following transactions occurred:
1.	On February 1, rented a small studio for one year. Paid $6,000 cash.
2.	On November 1, received $1,200 cash for dance lessons to be provided evenly over November, December, and January.
3.	By December 31, used $3,000 of the supplies
4.	At December 31, accrued $3,000 in wages and salaries.
5.	During the year, paid $20,000 in cash for wages and salaries.
6.	During the year, earned $40,000 cash in dance lesson revenue.

Required
 
 A. Determine the effect on the accounting equation of the preceding transactions. Create a table to reflect the increases and decreases in accounts.  
  B. Prepare an income statement for Frannie's Dance Studio for 2017. Ignore income tax effects.

C. Prepare a classified balance sheet for Frannie's Dance Studio at December 31,2017.

Quizplus · Accepted Answer

The Answer of Frannie's Dance Studio accounting records reflect the following account balances at January 1, 2017.
 $\begin{array} { l r l r } 
\text { Cash } & \$ 100,000 & \text { Supplies } & \$ 4,000 \
\text { Capital Stock } & 50,000 & \text { Retained Earnings } & 54,000
\end{array}$
During 2017, the following transactions occurred:
1.	On February 1, rented a small studio for one year. Paid $6,000 cash.
2.	On November 1, received $1,200 cash for dance lessons to be provided evenly over November, December, and January.
3.	By December 31, used $3,000 of the supplies
4.	At December 31, accrued $3,000 in wages and salaries.
5.	During the year, paid $20,000 in cash for wages and salaries.
6.	During the year, earned $40,000 cash in dance lesson revenue.

Required
 
 A. Determine the effect on the accounting equation of the preceding transactions. Create a table to reflect the increases and decreases in accounts.  
  B. Prepare an income statement for Frannie's Dance Studio for 2017. Ignore income tax effects.

C. Prepare a classified balance sheet for Frannie's Dance Studio at December 31,2017.

Frannie's Dance Studio Accounting Records Reflect the Following Account Balances