Question

4/01/17	Alex contributed $10,000 cash; two computers with the fair value of $2,500 and an old truck fully paid with the fair value of $9,600 (remaining useful life of 4 years and SV of $2,000).
4/01/17	The same day, he bought a lawnmower machine for $5,000 putting down, $2,000 cash and the rest on Accounts  payable to be paid by May 31, 2017.
4/01/17	Rented a small office building for operation and paid 3 months’ rent in advance for $4,500 (to be recorded as Prepaid rent)
4/02/17	Contracted local advertising agency for a 3 months prepaid advertising plan of $1,200.
4/02/17	Hired a receptionist/bookkeeper (Mary K) with a salary of $600 per two weeks, (30 hours of work each week)
4/05/17	Alex has signed a 90 days note with the Local First VA bank for $10,000 and annual interest rate of %5. This loan requires Alex to submit the financial statements at the end of each month, starting April 30.
4/05/17	Alex signed a contract with a large hotel to provide landscaping services for period of April-September and collected 6,000 in advance to be recorded evenly over the period.
4/15/17	Recorded and paid salary to Mary K for two weeks.
4/15/17	In response to first 2 residential calls for service, Alex completed the lawn services and customers were billed to pay by 4/25/17 for the amount of $120.
4/25/17	Alex worked on 3 customers’ lawns, who paid the fee for the services in cash: $180.00
4/29/17	Recorded and paid salary to Mary K for another two weeks.
4/30/17	Alex withdrew $1,000 for personal expenses.
4/30/17	Mary K. recorded all necessary adjusting entries for the month end.
4/30/17	Submitted a copy of the financial statements to the Bank in compliance with the Loan’s provisions.

Utilizing the Working paper provided to you on the Moodle, complete the following tasks in class:

1. You have been asked to make all necessary journal entries for the month of April.
2. Post JEs for to ledger accounts provided to you.
3. Prepare necessary Adjusting entries and closing entries for the end of April.
4. Prepare an adjusted Trial balance
5. Prepare Income statement, Statement of Owner’s equity, and Balance sheet for Alex Shaman Lawnmower service.

Answer 1

In the books of Alex Shaman Lawnmower Service :

Date	Account Titles	Debit	Credit
		$	$
4/01/17	Cash	10,000
	Computer Equipment	2,500
	Truck	9,600
	A. Shaman, Capital		22,100
4/01/17	Equipment	5,000
	Cash		2,000
	Accounts Payable		3,000
4/01/17	Prepaid Rent	4,500
	Cash		4,500
4/02/17	Prepaid Advertising	1,200
	Cash		1,200
4/02/17	No journal entry needed	0	0
4/05/17	Cash	10,000
	Notes Payable		10,000
4/05/17	Cash	6,000
	Unearned Service Revenue		6,000
4/15/17	Salaries Expense	600
	Cash		600
4/15/17	Accounts Receivable	120
	Service Revenue		120
4/25/17	Cash	180
	Service Revenue		180
4/29/17	Salaries Expense	600
	Cash		600
4/30/17	A. Shaman, Withdrawals	1,000
	Cash		1,000

Adjusting entries:

Date	Account Titles	Debit	Credit
4/30/17		$	$
a.	Unearned Service Revenue	1,000
	Service Revenue		1,000
b.	Depreciation Expense	158
	Accumulated Depreciation : Truck		158
c.	Rent Expense	1,500
	Prepaid Rent		1,500
d.	Advertising Expense	400
	Prepaid Advertising		400
e.	Interest Expense ( $ 10,000 x 5 % x 26/360)	36
	Interest Payable		36
f.	Salaries Expense	60
	Salaries Payable		60

4.

Alex Shaman Lawnmower Service Adjusted Trial Balance April 30, 2017
Account Titles	Debit	Credit
	$	$
Cash	16,280
Accounts Receivable	120
Prepaid Rent	3,000
Prepaid Advertising	800
Lawnmower Equipment	5,000
Truck	9,600
Accumulated Depreciation : Truck		158
Computer Equipment	2,500
Accounts Payable		3,000
Salaries Payable		60
Interest Payable		36
Unearned Service Revenue		5,000
Notes Payable		10,000
A. Shaman, Capital		22,100
A. Shaman, Withdrawals	1,000
Service Revenue		1,300
Salaries Expense	1,260
Rent Expense	1,500
Advertising Expense	400
Depreciation Expense	158
Interest Expense	36
Totals	$ 41,654	$ 41,654

5.a.

Alex Shaman Lawn Mower Service Income Statement For the month ended April 30, 2017
	$	$
Service Revenue		1,300
Expense
Salaries Expense	1,260
Rent Expense	1,500
Advertising Expense	400
Depreciation Expense	158
Interest Expense	36
Total Expenses		3,354
Net Income ( Loss )		$ (2,054)

b.

Alex Shaman Lawnmower Service Statement of Owner's Equity For the month ended April 30, 2017
Balance, April 1	$ 0
Capital Introduced	22,100
Less: Net Loss for the period	(2,054)
Less: A. Shaman, Withdrawals	(1,000)
Balance, April 30	$ 19,046

c.

Alex Shaman Lawn Mower Service Balance Sheet April 30, 2017
Assets	$	$	Liabilities and Owner's Equity	$	$
Cash	16,280		Accounts Payable	3,000
Accounts Receivable	120		Salaries Payable	60
Prepaid Rent	3,000		Unearned Service Revenue	5,000
Prepaid Advertising	800		Interest Payable	36
Total Current Assets		20,200	Note Payable	10,000
Lawnmower Equipment	5,000		Total Current Liabilities		18,096
Truck, net	9,442
Computer Equipment	2,500		Owner's Equity
Fixed Assets, net		16,942	A. Shaman, Capital		19,046
Total Assets		$ 37,142	Total Liabilities and Owner's Equity		$ 37,142