Week 1 Assignment Question 1: Ruddy Lewis Operates A Bike Re

Question

Week 1 Assignmentquestion 1ruddy Lewis Operates A Bike Repair Shop Ope Ruddy Lewis operates a bike repair shop operating under the name R.L. Bike Repairs. The balances of his accounts on April 1 of the current year were as follows: Cash $10,800 Supplies $1,200 Machines $6,400 Accounts Payable $6,000 Capital $12,400. The following transactions occurred in April: 1. Paid wages of $700 for the first pay period. 2. Paid creditors on account $4,000. 3. Purchased a new machine on account for $3,000. 4. Received $7,200 cash from customers for bike repairs service. 5. Paid courier service expense $200. 6. Paid $850 cash for wages for the second pay period. 7. Ruddy Lewis withdrew $500 cash for personal use (“drawings”). 8. Paid creditors on account $1,000. 9. Inventory of supplies at the end of April 30 was $300. 10. Received $3,500 cash from customers for bike repairs service. You are required to record the transactions in the provided format, showing the balances on each account at the end of each transaction cycle. Transaction 1 has been completed as an example.

Dr. Jack HW Helper · Accepted Answer

Introduction The accounting process requires systematic recording of all financial transactions to ensure accurate financial statements and effective decision-making. This paper demonstrates the recording of R.L. Bike Repairs' April transactions, analyzing the impact on assets, liabilities, and owner’s equity. Initial Balances and Transaction Recording On April 1, the initial balances of the accounts are as provided. The transactions that follow influence these balances in various ways, which are documented systematically. The method involves updating each account accordingly after each transaction, maintaining the fundamental accounting equation: Assets = Liabilities + Owner’s Equity. Transaction 1: Payment of Wages Transaction 1 involves a wage expense of $700 paid for the first pay period. This reduces the cash account and increases wages expense, which reduces owner’s equity. The updated balances reflect this outflow and expense recognition. Transaction 2: Paying Creditors on Account Payment of $4,000 to creditors reduces cash and accounts payable. This transaction signifies a decrease in liabilities and assets, maintaining balance in the accounting equation. Transaction 3: Purchase of a Machine on Account The purchase of equipment worth $3,000 on credit increases machines (assets) and accounts payable (liabilities). It does not affect cash at this point. Transaction 4: Cash Received for Services Receiving $7,200 from customers increases cash and recognizes revenue, which increases owner’s equity. Transaction 5: Payment of Courier Expenses Paying $200 for courier services decreases cash and increases expenses, ultimately reducing owner’s equity. Transaction 6: Wage Payment for Second Pay Period This transaction similarly decreases cash and records wages expense, affecting owner’s equity. Transaction 7: Owner’s Drawings Owner’s withdrawal of $500 decreases cash and owner’s equity. Transaction 8: Paying Creditors Another payment of $1,000 reduces cash and accounts

Week 1 Assignment Question 1: Ruddy Lewis Operates A Bike Re

Week 1 Assignmentquestion 1ruddy Lewis Operates A Bike Repair Shop Ope

Paper For Above instruction

Introduction

Initial Balances and Transaction Recording

Transaction 1: Payment of Wages

Transaction 2: Paying Creditors on Account

Transaction 3: Purchase of a Machine on Account

Transaction 4: Cash Received for Services

Transaction 5: Payment of Courier Expenses

Transaction 6: Wage Payment for Second Pay Period

Transaction 7: Owner’s Drawings

Transaction 8: Paying Creditors

Transaction 9: Supplies Inventory Adjustment

Transaction 10: Cash from Customers

Conclusion

References