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Red Robin Messenger Service is incorporated on January 2 and enters into the following transactions during...

Red Robin Messenger Service is incorporated on January 2 and enters into the following transactions during its first month of operations.

Required:

1. Prepare journal entries on the books of Red Robin Messenger Service to record the transactions entered into during the month. How does this entry affect the accounting equation?

Indicate the effect on financial statement items by selecting "–" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

January 2: Filed articles of incorporation with the state and issued 100,000 shares of capital stock. Cash of $100,000 is received from the new owners for the shares.

Journal Balance Sheet Income Statement
Stockholders’ Net
Date Description Debit Credit Assets = Liabilities + Equity Revenues – Expenses = Income
Jan. 2
     

January 3: Purchased a warehouse and land for $89,000 in cash. An appraiser values the land at $20,000 and the warehouse at $69,000. If an amount box does not require an entry, leave it blank.

Journal Balance Sheet Income Statement
Stockholders’ Net
Date Description Debit Credit Assets = Liabilities + Equity Revenues – Expenses = Income
Jan. 3
     

January 4: Signed a three-year promissory note at Third State Bank in the amount of $59,000.

Journal Balance Sheet Income Statement
Stockholders’ Net
Date Description Debit Credit Assets = Liabilities + Equity Revenues – Expenses = Income
Jan. 4
     

January 6: Purchased five new delivery trucks for a total of $45,000 in cash.

Journal Balance Sheet Income Statement
Stockholders’ Net
Date Description Debit Credit Assets = Liabilities + Equity Revenues – Expenses = Income
Jan. 6
     

January 31: Performed services on account that amounted to $15,900 during the month.

Journal Balance Sheet Income Statement
Stockholders’ Net
Date Description Debit Credit Assets = Liabilities + Equity Revenues – Expenses = Income
Jan. 31
     

January 31: Cash amounting to $7,490 was received from customers on account during the month.

Journal Balance Sheet Income Statement
Stockholders’ Net
Date Description Debit Credit Assets = Liabilities + Equity Revenues – Expenses = Income
Jan. 31
     

January 31: Established an open account at a local service station at the beginning of the month. Purchases of gas and oil during January amounted to $3,230. Red Robin has until the 10th of the following month to pay its bill.

Journal Balance Sheet Income Statement
Stockholders’ Net
Date Description Debit Credit Assets = Liabilities + Equity Revenues – Expenses = Income
Jan. 31
     

2. Prepare a trial balance at January 31. If an amount box does not require an entry, leave it blank.

Red Robin Messenger Service
Trial Balance
January 31
Debit Credit
$ $
Totals $ $

Solutions

Expert Solution

Jan Journal Entries Dr. ($) Cr. ($)
2 cash 100000
To common stock 100000
3 land 20000
warehouse 69000
To cash 89000
4 cash 59000
To promissory note 59000
6 trucks 45000
To cash 45000
31 accounts receivable 15900
To services 15900
31 cash 7490
To accounts receivable 7490
31 gas and oil expenses 3230
To accounts payable 3230
Red Robin Messenger
Trial Balance
For the period Jan.31 (amounts in $)
accounts Dr. ($) Cr. ($)
cash 32490
accounts receivable 8410
land 20000
warehouse 69000
trucks 45000
common stock 100000
accounts payable 3230
promissory notes 59000
services 15900
gas and oil expenses 3230
totals 178130 178130
Red Robin Messenger
Income Statement
For the period Jan.31 (amounts in $)
services 15900
total revenue 15900
less operating expenses
gas and oil expenses 3230
total expenses 3230
net income 12670
Red Robin Messenger
Balance Sheet
As of Jan.31 (amounts in $)
assets
current assets
cash 32490
accounts receivable 8410
total current assets 40900
non current assets
land 20000
warehouse 69000
trucks 45000 134000
total assets 174900
liabilities
accounts payable 3230
promissory notes 59000
total liabilities 62230
stockholders equity
common stock 100000
retained earnings 12670
total stockholders equity 112670
total liabilities and stockholders equity 174900

ekkarill92 answered 1 year ago
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