Question

Six Requirements:

1. Prepare the journal entries and post to the T-accounts.
2. Prepare the adjusting entries and post to the T-accounts.
3. Prepare an adjusted trial balance.
4. Prepare the income statement, the statement of owner's equity, and a classified balance sheet. Use proper formatting techniques including headings and dollar signs.
5. Prepare the closing entries.
6. Calculate the following measurements: Working Capital, Current Ratio, Profitability rate/percentage, Net Income Percentage. Comment with two to three sentences on how your business is performing after one month of operations.

You opened a new pet supplies store and named it Ozzie’s Pet Supply and Boarding on December 1, 2019. The following information about December’s transactions, accounts, and adjustment data is available.

Transactions:
Dec. 1 Family members contributed $50,000 cash to the business in exchange for capital.

Dec. 2 Purchased $10,800 of equipment for the store paying cash.

Dec. 3 Paid $4,500 for a 9-month insurance policy starting on December 1.

Dec. 4 Paid $18,000 cash to purchase land to be used in operations.

Dec. 5 Purchased office supplies on account, $3,000.

Dec. 6 Borrowed $28,000 from the bank for business use. You signed a bank payable note for an interest rate of 5% APR.

Dec. 7Paid $800 for advertising expenses.

Dec. 8 Purchased inventory (dog food) for the store at a cost of $1,500

Dec. 9 Paid for office supplies $3,000

Dec 10 Received a bill for utilities to be paid in January, $200.

Dec 31 Service Revenues earned during the month included $18,500 cash and $2,000 on account.

Dec. 31 Sold one hundred percent of the dog food purchased on Dec. 8^th for $2,100 in cash.

Dec. 31 Paid employees' salaries $2,000 and building rent $800.

Dec. 31 Dividends of $200 were paid.

Dec. 31 Customer prepaid $1,000 for boarding services in January.

Accounts

Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Equipment; Accumulated Depreciation-Equipment; Land; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Bank Notes Payable; Family, Capital; Service Revenue; Dog Food Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense-Equipment; Inventory; COGS; Dividends; Service Charge-Bank; Uncollectible Accounts Expense; Allowance for Doubtful Accounts.

Adjustment Data

1. Office Supplies used during the month, $600.
2. Depreciation on the Equipment for the month should be calculated based on straight-line depreciation and a useful life of 4 years (zero residual).
3. One month insurance has expired.
4. Calculate accrued interest expense and make adjusting entry.
5. Service charge from bank totaled $25.
6. Sales Method for reserving for doubtful accounts was executed (Remember, only A/R balances are considered).

Answer 1

Answer:

Date	General Journal	Debit ($)	Credit ($)
Dec.01	Cash	50,000
	Family, Capital		50,000
Dec.02	Equipments	10,800
	Cash		10,800
Dec.03	Prepaid Insurance	4,500
	Cash		4,500
Dec.04	Land	18,000
	Cash		18,000
Dec.05	Supplies	3,000
	Account payable		3,000
Dec.06	Cash	28,000
	Bank notes payable		28,000
Dec.07	Advertising expense	800
	Cash		800
Dec.08	Inventory	1,500
	Cash		1,500
Dec.09	Account payable	3,000
	Cash		3,000
Dec.10	Utilities expense	200
	Utilities payable		200
Dec.31	Cash	18,500
	Account receivable	2,000
	Service revenue		20,500
Dec.31	Cash	2,100
	Dog food revenue		2,100
Dec.31	Cost of goods sold	1,500
	Inventory		1,500
Dec.31	Salaries expense	2,000
	Rent expense	800
	Cash		2,800
Dec.31	Dividend	200
	Cash		200
Dec.31	Cash	1,000
	Unearned revenue		1,000
Date	Adjusting Journal	Debit ($)	Credit ($)
Dec.31	Supplies expense	600
	Supplies		600
Dec.31	Depreciation expense-Equipment ($10,800/4 yrs *1/12)	225
	Accumulated depreciation-Equipment		225
Dec.31	Insurance expense ($4,500 * 1/9)	500
	Prepaid insurance		500
Dec.31	Interest expense ($28,000 * 5% * 1/12)	117
	Interest payable		117
Dec.31	Service charge-Bank	25
	Cash		25

Percentage for calculating allowance for doubtful account is not given in the question. Hence, Uncollectible Accounts Expense can not be calculated.