Reference no: EM132716391

Eryl Ozan was always fascinated with people. Eryl decided to become a full time artist and paint portraits of people for a living in order to study them closer. Eryl named the business Immortal Image Co. with hopes that the paintings will be cherished for generations to come. Eryl has done fairly well in the few years since opening and is known throughout the province. This business had following balances in the accounts at July 1: Cash $485,600, Accounts receivable $86,400, Prepaid insurance $2,170, Painting supplies $13,170, Vehicle $26,500, Furniture 4,450, Accounts payable $69,700, Deferred revenue $3,300 and the balance in the equity account.

The following events happened during July 2021 (July 1 to 31, 2021):

a) Eryl invested assets into the business, $262,000 in cash and furniture valued at $71,100.
b) Eryl was commissioned to paint Greta Robertson's child in August 2021 when the child, Ezra, will be home from school. Greta put down a deposit of $3,700 to book that spot.
c) Immortal Image Co. paid $300 for insurance coverage for the next fiscal period.
d) Ezra completed a family portrait for the Ortiz family and billed Juan Ortiz for $670.
e) Company received a bill from the utility company for electricity for the month of July of $330.
f) Eryl, the owner, signed a contract to purchase a vehicle for $42,300 on behalf of the company. They paid $4,750 in cash and the reminder was financed by a bank loan.
g) Immortal Image Co. paid $340 owing on the accounts payable.
h) Immortal image Co. received $40,900 in cash from customers for completed same day caricatures.
i) Paid wages to employees of $13,510.
j) Used $2,120 of supplies during the month.
k) Received $9,120 from a customer as a payment on account.
l) Received a bill from the telecommunication company for the phone and the internet for the month of July in the amount of $105.
m) Purchased painting supplies for $205.
n) Paid a Johnston and Associates' bill of $1,795 for accounting services rendered in July.
o) Ezra took cash of $200 from the business to cover a night out with friends.
p) Paid $675 bank loan payment. Of that payment, $325 was principal and the remainder was interest.

Required:

Problem 1: Analyze each transaction and prepare the table following the accounting equation format as shown during the lecture. Based on your table, prepare the statement of profit or loss, statement of changes in equity, and statement of financial position.

Problem 2: What is the closing equity amount based on the Statement of financial position?