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Steamy Stacks, Inc. sells toy trains. Steamy Stacks began business on October 1 by issuing (selling) 10,000...
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 1st and 16th of each month for the periods ending on the 15th 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.
During the month of November, the following transactions occurred:
Start your worksheet with beginning balances of $116,000 (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. (500 trains @ $25 each)
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. (sold 300 trains @ $45 each)
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 $780.
REQUIREMENTS:
1. Record transactions on worksheet according to the accrual method of accounting.
2. Prepare a multi-step income statement for the month of November.
3. Prepare a statement of stockholder’s equity as of November 30
4. Prepare a classified balance sheet for Steamy Stacks as of November 30.
Only looking for help with the November transaction list, income statement, Stockholders equity, and balance sheet.
Solutions
Expert Solution
| 1. Journal Entries | |||
| JOURNAL ENTRIES | |||
| Date | Particulars | Debit ($) | 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 | ||
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represents investment by owners. Steamy Stacks uses the accrual
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10/1 Issued 10,000 shares of no par common stock for $10 per
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10/1 Paid rent of $1,500 for office and retail space for month
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