Homeworks, Inc. was a small corporation that provided home repair services in the Town of Elling- ton. Its services included chores, minor repairs, painting, snow shoveling, and gardening. It charged $30 per hour to its clients, and paid its service staff $14 per hour.
Homeworks began operations in January 2013. During the month of January, the following events occurred:
January 2 Homeworks' investors contributed a total of $10,000 in cash.
January 3 Homeworks' took out a $5,000 loan from a local bank to help finance its activities.
January 5 $5,200 of equipment (e.g. carpentry tools, snow shovels, etc.) was purchased for cash. Equipment is a fixed (non-current) asset.
January 12 $3,000 of supplies (e.g. paint) were purchased from a local hardware store. Payment was not due until February 10. These were put into the supply inventory.
January 14 Clients paid for 125 hours of work that were completed during the first half of the month.
January 15 Service staff was paid for the 125 hours of work that was completed.
January 16 The president was paid $2,000 for one-half month of work.
January 20 $2,000 of additional supplies were purchased. Payment was made in cash.
January 28 Clients paid for 150 hours of work that were completed during the second half of the month.
January 29 Service staff was paid for the 150 hours of work that was completed.
January 31 The president was paid $2,000 for the second half of the month.
Questions
1. Prepare a balance sheet for Homeworks as of January 31, 2013. To do so, draw up a balance sheet, and make entries to the appropriate accounts for each event described above. Leave suffi- cient space below each asset, liability, and equity account to make several entries.
2. By how much did Homeworks' equity increase during January 2013? Why?
3. How has Homeworks financed its assets? Is this good or bad?