A first year in the template, solved together.
Read the question one line at a time, fill in the A = L + E template and check each row, then turn the totals into the four financial statements.
Read the question, line by line
Each line in plain words: the key words to spot, what moves in the template and whether profit changes. Read a line, say the answer out loud, then check it.
Hughes Tools Company opened on October 1, 2019. Its year runs to September 30. Everything below happens in its first year: October 1, 2019 to September 30, 2020.
This is the company’s very first year, so every account starts at zero. Our job is to record each event in the template, add up every column, and check that assets still equal liabilities plus equity.
- fiscal yearthe company's own 12-month year. Here it ends Sep 30, not Dec 31.
- started businessno opening balances: every column starts at 0.
Solve it in the template
The template from part (a) of the question. Fill it in yourself and check each row, or walk through the worked answer one row at a time. Click a row number to read that line of the question again.
Type each change with a sign: 75000, -75,000 or (75,000). Leave a cell blank if it does not change. Then press Check on the row, or Show if you are stuck.
| Assets | Liabilities | S/H Equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Ref. | Cash | A/R | Prepaid Rent | Inventory | Equipment | A/P | Notes Payable | Common Shares | R/E | Rev/Exp/DD | |
| Total | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
The same transactions as journal entries
Every template row is one journal entry. Pick the accounts, type the debits and credits, then check. The template row is your hint: an asset going up is a debit, a liability or equity going up is a credit.
Oct 1, 2019: Jill Hughes puts $175,000 into the business and receives 10,000 common shares. She is the only owner.
From the template to the statements
Once the template balances, the financial statements are just its numbers, sorted. Fill them in.
Every amount comes straight from the template. The Rev/Exp/DD labels make the statement of income. Net income and dividends move retained earnings. The totals row is the statement of financial position. The Cash column, sorted into operating, investing and financing, is the statement of cash flows. The small numbers in brackets are the template rows. Type each amount (brackets or a minus sign are fine), then press Check.
Midterm coming up and journal entries still feel shaky?
Bring your practice problems. We work through them together until every type feels routine.
Questions, answered.
Still unsure about something? Message us and you will hear back within a day.
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