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Accounting Skills - Case Study

David started a web design company called Web Design Inc. He invested $10,000 of personal savings as capital for the business. The company's first transaction was buying a $800 laptop. They then received a $1,000 advance payment for a $3,000 website project. Rent of $500 was due and then paid on July 5th. The project was completed and the remaining $2,000 payment received on July 10th. This provides a summarized overview of the startup transactions and their impact on the company's financial statements.

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Anu Bansal Goyal
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38 views3 pages

Accounting Skills - Case Study

David started a web design company called Web Design Inc. He invested $10,000 of personal savings as capital for the business. The company's first transaction was buying a $800 laptop. They then received a $1,000 advance payment for a $3,000 website project. Rent of $500 was due and then paid on July 5th. The project was completed and the remaining $2,000 payment received on July 10th. This provides a summarized overview of the startup transactions and their impact on the company's financial statements.

Uploaded by

Anu Bansal Goyal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Accounting Skills Case Study David, a web designer, after working for many years with IT companies, has

s recently started a new web design company to provide website design and other related services to local businesses in his location. The company is named Web Design Inc. Running a web design company can pose many challenges. You need to get involved in all the aspects of the business, including renting the place, setting up the infrastructure, buying the required software, recruiting trained staff, marketing and promoting your business, and most importantly managing their finances. This article provides a summarized version of these transactions and their impact on the financial statements. It is recommended that you print a copy of this document and keep it handy while reviewing the lectures. Assumptions:

The business was started on June 1, 2012. The business follows the accounting period April 1, 2012 to March 31, 2013. David has rented a place for work and the first rent payment will be due on the 5th day of the following month.

Transactions at Web Design Inc. S. No. Date Transaction Invest Money in the Business Lets start the case study from the very beginning of the business, when David started the business. The first transaction was when he invested his personal savings Transaction 1 June 1, 2012 of $10,000 into the business. This becomes the capital for the business. The balance sheet will show $10,000 as the cash available and $10,000 as the owners equity.

Buy a New Laptop The first expenditure happens Transaction 2 June 5, 2012 on June 5 when David buys a new Laptop for his work. The laptop costs him $800.

Receive your first order A first break comes when you sign a contract to develop the website of a restaurant at the cost of $3,000. He receives an Transaction 3 June 10, 2012 advance payment of $1,000 for the project. David will develop this website and on successful completion, he will receive the balance payment.

Transaction 4

June 30, 2012 July 5, 2012

Rent is due $500.

Transaction 5

Rent is paid $500.

Transaction 6

July 10, 2012

Complete the project and send the bill for the balance $2,000. Receive the payment of $2,000 from the client.

Transaction 7

July 20, 2012

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