Below describes Company A's first month of operations. Prepare and answer sheet with the columns shown. Record each transaction in the appropriate columns of your answer sheet. Show the amounts involved and indicate how each amount is affected ( + or -) After all transactions have been recorded, calculate total assets, liabilities, and owners equity at the end of the month and calculate the amount of net income for the month.
A. The firm was organized and the owners invested cash of $600.
B. The company borrowed $900 from a relative of the owners; a short-term note was signed.
C. Two lawn mowers costing $480 each and a trimmer costing $130 were purchased for cash. The original list price of each mower was $610, but a discount was received because the seller was having a sale.
D. Gasoline, oil, and several packages of trash bags were purchased for cash of $90.
E. Advertising flyers announcing the formation of the business and a newspaper ad were purchased. The cost of these items, $170, will be paid in 30 days.
F. During the first two weeks of operations, 47 lawns were mowed. The total revenue for this work was $705; $465 was collected in cash and the balance will be received within 30 days.
G. Employees were paid $420 for their work during the first two weeks.
H. Additional gasoline, oil and trash bags costing $110 were purchased for cash.
I. In the last 2 weeks of the first month, revenues totaled $920, of which $375 was collected.
J. Employee wages for the last 2 weeks totaled $510; these will be paid during the first week of the next month.
K. It was determined that at the end of the month the cost of the gasoline, oil, and trash bags still on hand was $30.
L. Customers paid a total of $150 due from mowing services provided during the first 2 weeks. The revenues for these services was recognized in transaction F.
****Record the transactions above on the Assets = Liabilities + Owners Equity sheet that is attached (MS Excel Document).
Also, prepare an income statement for Company A for the month presented and a balance sheet as at the end of the month using the captions shown on the answer sheet. These can be added to the Excel answer sheet.© BrainMass Inc. brainmass.com October 25, 2018, 2:29 am ad1c9bdddf
The solution explains how to record the transactions using the accounting equation and prepare the income statement and balance sheet.
Adjusting entries, bal statement, income statement
On September 1, 2005, Kelly Randolf and Paul Simple started a comic book industry newsletter called Comic Times. They produced the first month's edition during September. The following transactions occurred during their first month of operations:
Sept 1: Comic Times, Inc., was formed when Kelly and Paul filed with the State of California and each received common stock in exchange for $10,000 cash.
Sept 1: Applied for a loan with a bank and signed a note for $5,000 due in two years, at 12% annual interest rate.
Sept 1: Purchased a computer for $4,000 cash.
Sept 1: Purchased office supplies on account with Rapid Supplies for $1,500.
Sept 1: Paid $2,400 for a website to be used for the next two years (24 months).
Sept 1: Sold 1,800 one-year subscriptions for cash at $12 each.
Sept 30: Sold 400 more one-year subscriptions for cash at $12 each. These subscriptions begin on October 1.
Sept 30: Paid for the office supplies purchased on September 1 from Rapid Supplies.
Sept 30: Paid $200 for utilities for the month of September.
Sept 30: Paid Kelly and Paul a salary of $400 each for the month of September.
Sept 30: Declared and paid a total dividend of $160.
The following additional information is provided concerning the adjusting entries necessary at the end of September:
A. Interest is accrued at the end of each month.
B. The computer is estimated to last for two years and to have no residual value.
C. At the end of September, office supplies are counted and there are $1,200 of supplies on hand.
D. The website expense is recognized monthly.
E. Revenue is recognized in the period earned.
1. Journalize the September transactions. (Omit explanations)
2. Journalize adjusting entries for September. Use September 30 as the date for each adjusting entry.
3. Prepare an income statement for Comic Times, Inc. for the month of September.
4. Prepare a statement of changes in stockholders' equity for the month of September.
5. Prepare a balance sheet for Comic Times, Inc. as of September 30, 2005.
Disregard the "Analyze" question at the end of the problem.View Full Posting Details