Question

Transaction Analysis Activity

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.

Answer 1