I am having trouble figuring out my accounts payable and capital. Any help on going about and solving this would be greatly appreciated. I have listed the data below...
Travis Fortney, an architect, opened an office on April 1, 2010. During the month, he completed the following transactions connected with his professional practice:
1. Transferred cash from a personal bank account to an account to be used for the business, $30,000.
2. Purchased used automobile for $19,500, paying $4,500 cash and giving a note payable for the remainder.
3. Paid April rent for office and workroom, $3,000.
4. Paid cash for supplies, $1,450.
5. Purchased office and computer equipment on account, $6,000.
6. Paid cash for annual insurance policies on automobile and equipment, $2,000.
7. Received cash from a client for plans delivered, $7,500.
8. Paid cash to creditors on account, $1,750.
9. Paid cash for miscellaneous expenses, $500.
10. Received invoice for blueprint service, due in May, $1,000.
11. Recorded fee earned on plans delivered, payment to be received in May, $5,200.
12. Paid salary of assistant, $1,600.
13. Paid cash for miscellaneous expenses, $325.
14. Paid installment due on note payable, $250.
15. Paid gas, oil, and repairs on automobile for April, $400.
Oops I said I could not figure out capital, it was processional fees that I meant to list. Capital is clearly 30,000.
I am sorry I am tired and meant to write professional fees.
To determine the accounts payable and capital for Travis Fortney's professional practice, we need to analyze the transactions and categorize them accordingly. Let's break down the transactions step-by-step:
Step 1: Transferred cash from a personal bank account to an account to be used for the business, $30,000.
- This transaction does not affect accounts payable or capital. It represents Travis Fortney's initial investment in the business and increases the Cash account.
Step 2: Purchased a used automobile for $19,500, paying $4,500 cash, and giving a note payable for the remainder.
- Note Payable is the liability account related to the amount financed. The initial payment of $4,500 is a reduction in the Cash account.
Step 3: Paid April rent for the office and workroom, $3,000.
- This payment reduces the Cash account and does not impact accounts payable or capital.
Step 4: Paid cash for supplies, $1,450.
- This payment reduces the Cash account and does not impact accounts payable or capital.
Step 5: Purchased office and computer equipment on account, $6,000.
- This transaction increases the Office and Computer Equipment asset account and creates an accounts payable liability.
Step 6: Paid cash for annual insurance policies on the automobile and equipment, $2,000.
- This payment reduces the Cash account and does not affect accounts payable or capital.
Step 7: Received cash from a client for plans delivered, $7,500.
- This transaction increases the Cash account and does not impact accounts payable or capital.
Step 8: Paid cash to creditors on account, $1,750.
- This payment reduces the Cash account and decreases the accounts payable liability.
Step 9: Paid cash for miscellaneous expenses, $500.
- This payment reduces the Cash account and does not affect accounts payable or capital.
Step 10: Received an invoice for blueprint service, due in May, $1,000.
- This transaction does not affect accounts payable or capital as it represents a future payment obligation.
Step 11: Recorded a fee earned on plans delivered, payment to be received in May, $5,200.
- This transaction increases the accounts receivable asset account and recognizes the revenue earned. It does not impact accounts payable or capital.
Step 12: Paid the salary of an assistant, $1,600.
- This payment reduces the Cash account and does not affect accounts payable or capital.
Step 13: Paid cash for miscellaneous expenses, $325.
- This payment reduces the Cash account and does not affect accounts payable or capital.
Step 14: Paid the installment due on the note payable, $250.
- This payment reduces the Note Payable liability account. It does not impact accounts payable or capital.
Step 15: Paid for gas, oil, and repairs on the automobile for April, $400.
- This payment reduces the Cash account and does not affect accounts payable or capital.
After analyzing the transactions, here are the final balances:
Accounts Payable: $6,000 (from the purchase of office and computer equipment)
Capital: $30,000 (Travis Fortney's initial investment)
Please note that the capital account may change depending on the income, expenses, and withdrawals made by Travis Fortney in subsequent transactions.
To calculate your accounts payable and capital, let's break down the transactions and identify the components related to these two categories.
Accounts Payable:
Accounts payable refers to the amount you owe to your creditors or suppliers for goods or services purchased on credit. It represents your short-term liabilities. Based on the given data, the following transactions are relevant to accounts payable:
Transaction 5: Purchased office and computer equipment on account, $6,000.
Transaction 8: Paid cash to creditors on account, $1,750.
Transaction 10: Received invoice for blueprint service, due in May, $1,000.
To calculate the accounts payable balance, you need to consider the purchases made on account (transaction 5) and any outstanding invoices yet to be paid (transaction 10). In this case, the accounts payable balance is $6,000 + $1,000 = $7,000.
Capital:
Capital represents the owner's equity or investment in the business. It refers to the funds contributed by the owner to start or operate the business. Based on the given data, the following transactions are relevant to capital:
Transaction 1: Transferred cash from a personal bank account to a business account, $30,000.
To calculate the capital balance, you need to consider the initial cash investment made by Travis Fortney (transaction 1). In this case, the capital balance is $30,000.
Therefore, the accounts payable balance is $7,000, and the capital balance is $30,000.
Keep in mind that this is a simple calculation based on the provided data. In practice, there may be additional transactions and factors to consider when calculating accounts payable and capital. It's always advisable to consult with an accountant or financial professional for a comprehensive analysis of your financial situation.