Question

Steamy Stacks, Inc. sells toy trains. Steamy Stacks began business on October 1 by issuing (selling) 10,000 shares of no par common stock. for $10 per share. The issuance of common stock represents investment by owners. Steamy Stacks uses the accrual method of accounting.

During the month of October, the following transactions occurred:

10/1     Issued 10,000 shares of no par common stock for $10 per share.

10/1     Paid rent of $1,500 for office and retail space for month of October.

10/5     Purchase 500 toy trains for $25 each. The trains were received by Steamy Stacks and payment is due on November 5.

10/10   Sold 150 trains for $45 each. The trains were delivered and cash was received.

            HINT: Remember to ‘match’ expenses to revenue they helped to generate…

10/16   Paid $3,000 wages to employees. Employees are paid on the 1^st and 16^th of each month for the periods ending on the 15^th and last day of month, respectively. For simplicity, assume all payments equal $3,000.

10/17   Sold 300 trains for $45 each. The trains were delivered. Payment is due on Nov. 17.

10/20   Ordered Christmas Steamy Stacks advertisement. The advertisements are scheduled to run the last week of November. The advertising agency required 40% payment with the order and the total charge was $1,300. Paid $520.

10/22 Received order for 125 trains to be delivered December 10.

10/31   Paid a cash dividend of $ .10 per share of common stock.

REQUIREMENTS:

1. Record transactions on worksheet according to the accrual method of accounting.
2. Prepare a multi-step income statement for the month of October.
3. Prepare a statement of stockholders equity as of October 31.
4. Prepare a classified balance sheet for Steamy Stacks as of October 31.

During the month of November, the following transactions occurred:

Start your worksheet with beginning balances (i.e. Ending balance Oct = beg. balance Nov.)

11/1     Paid $3,000 wages to employees.

11/1     Paid rent of $1,500 for office and retail space for month of November.

11/1     Paid $12,000 for one year of insurance premiums.

11/4     Paid for trains received Oct. 5.

11/6     Purchased 300 trains for $25 each. Paid cash.

11/9     Received an order for 100 trains to be delivered on Nov. 19.

11/12   Received an order for 500 trains to be delivered on Dec 10. Since such a large order, Steamy Stacks required a deposit of $11,000.

11/15   Received payment associated with sale on Oct. 17.

11/16   Paid $3,000 wages to employees.

11/19   Delivered the trains ordered on November 9 (100 trains at $45). Payment due Dec. 9.

11/20   Sold 150 trains for $45 each. The trains were delivered. Cash was received.

11/21   Fired an employee for inappropriate behavior. This will reduce the payroll from $3,000 to $2,800 for the period ending 11/30.

11/22   Purchased 1,000 business cards from Kinko’s. Delivery and payment of $100 made.

11/25   Purchased 200 trains for $25 each. Payment is due Dec. 22.

11/29 Borrowed $25,000 from the bank by signing a five-year, 6% a.p.r. note. Interest payments are due quarterly.

11/30   Christmas advertisement ran last week of November. Paid the remaining balance of $780.

REQUIREMENTS:

1. Record transactions on worksheet according to the accrual method of accounting.
2. Prepare a multi-step income statement for the month of November.
3. Prepare a statement of stockholders equity as of November 30
4. Prepare a classified balance sheet for Steamy Stacks as of November 30.

Can You please solve. If you can't do both, Can you please do the one for November? Thanks.

Answer 1

For month November:

1. Journal Entries
JOURNAL ENTRIES
Date	Particulars	Debit ($)	Credit ($)
11/1	Wages A/c               DR	3,000.00
	To, Cash A/c		3,000.00
11/1	Office and retail space rent A/c   DR	1,500.00
	To, Cash A/c		1,500.00
11/1	Prepaid Insurance premuim A/c    DR	12,000.00
	To, Cash A/c		12,000.00
11/4	Account Payable A/c                  DR	12,500.00
	To, Cash A/c		12,500.00
11/6	Purchase A/c                  DR	7,500.00
	To, Cash A/c		7,500.00
11/9	No Entry
11/12	Cash A/c                                DR	11,000.00
	To, Security Deposit A/c		11,000.00
11/15	Cash A/c                               DR	13,500.00
	To, Account Receivable A/c		13,500.00
11/16	Wages A/c               DR	3,000.00
	To, Cash A/c		3,000.00
11/19	Account Receivable A/c          DR	4,500.00
	To, Sales A/c		4,500.00
11/20	Cash A/c                                   DR	6,750.00
	To, Sales A/c		6,750.00
11/21	Cash A/c                                   DR	200.00
	To, Wages A/c		200.00
11/22	Stationery A/c                           DR	100.00
	To, Cash A/c		100.00
11/25	Purchase A/c                  DR	5,000.00
	To, Account Payable A/c		5,000.00
11/29	Cash A/c                                  DR	25,000.00
	To, 6% a.p.r Note		25,000.00
11/30	Advertisement Payable A/c       DR	780.00
	To, Cash A/c		780.00

2. Income Statement
INCOME STATEMENT
for the month on Novmber,
Particulars	($)	($)
Revenue		11,250.00
Opening Stock	1,250.00
Add: Purchase	12,500.00
	13,750.00
Less: Closing Stock	7,500.00
Cost of Goods Sold		6,250.00
Gross Profit		5,000.00
Wages	5,800.00
Office and retail space rent	1,500.00
Stationery	100.00
Indirect Expenses		7,400.00
Net Profit / (Loss)		(2,400.00)

3. Statement of stockholder’s equity
STATEMENT OF STOCKHOLDER's EQUITY
as of November, 30
Particulars	($)	($)
Beginning balances		116,000.00
Add: Net Profit / (Loss)		(2,400.00)
		113,600.00
Less: Withdraw		-
Closing Balance		113,600.00

4. Balance Sheet
BALANCE SHEET
as of November, 30
Particulars	($)	($)
EQUITY AND LIABILITIES
Stockholder's Equity		113,600.00
NON CURRENT LIABILITIES
6% a.p.r Note		25,000.00
CURRENT LIABILITIES
Security Deposit from Customer	11,000.00
Account Payable	5,000.00	16,000.00
TOTAL LIABILITIES		154,600.00
ASSETS
NON CURRENT ASSETS
Fixed Assets		-
Investment		-
CURRENT ASSETS
Loans & Advance:
Prepaid Insurance		12,000.00
Other current assets:
Inventory	7,500.00
Accounts Receivable	4,500.00
Cash	130,600.00	142,600.00
TOTAL ASSETS		154,600.00