John Smith starts a sole proprietorship, Johnny's Store, on December 1, 2009. He plans to reinvest all profits in the business for the first several years.
I. Using Excel, record the following transactions in journal entry form.
1. Smith opens a bank account in the name of Johnny's Store with his personal check for $5,000
2. The company borrows $10,000 from bank on a 3-year note
3. The company prepays rent, $1,800 for 3 months
4. The company buys equipment for cash, $4,800
5. The company buys supplies on account, $800
6. The company buys merchandise on account, $3,500
7. The company sells merchandise, cost $900, for $1,450 cash
8. The company sells merchandise, cost $1,250, for $2,200 on account
9. The company pays for the supplies purchased in #5 above
10. The company receives electric bill for December, not due until January, $160
II. John wishes to have his fiscal year end on December 31st. Record the following adjusting entries in debit/credit form.
1. Accrued interest on the note (interest rate is 6% annually)
2. Depreciation on equipment (life, 10 years)
3. Expiration of one month rent
4. $75 worth of supplies were used during the month
III. Prepare a trial balance, using formulas in the cells linking to the above transactions.
This solution details the journal entries, adjusting entries, trial balance, and income statement and balance sheet for Johnny's Store. It is given in Excel format.