Question

Chapter 2 Mastery Problem

The T – Accounts are set up for you in the excel spreadsheet.

Hassan Rahim won a concession to rent bicycles in the local park during the summer. During the month of June, Hassan completed the following transactions for his bicycle rental business:

Chart of Accounts

Cash	Hassan Rahim Capital
Accounts Receivable	Hassan Rahim, Withdrawals
Supplies	Rental Income
Shed	Wages Expense
Bicycles	Maintenance Expense
Accounts Payable	Repair Expense
	Concession Fee Expense

June	2	Began business by placing $7,200 in a business checking account.
	3	Purchased supplies on account, $150
	4	Purchased 10 Bicycles for $2,500, paying $1,200 down and agreeing to pay the rest in thirty days.
	5	Purchased for cash a small shed to hold the bicycles and to use for other operations, $2,900
	6	Paid cash for shipping and installation costs (considered as an addition to the cost of the shed) to place the shed at the park entrance, $400.
	8	Received cash of $470 for rentals during the first week of operation.
	13	Hired a part-time assistant to help out on weekends at $7.50 per hour
	14	Paid a maintenance person to clean the grounds, $75.
	15	Received cash, $500, for rentals during the second week of operation.
	16	Paid the assistant for a weekend’s work, $150.
	20	Paid for the supplies purchased on June 3, $150.
	21	Paid repair bill on bicycles, $55.
	22	Received cash for rentals during the third week of operation, $550.
	23	Paid the assistant for a weekend’s work, $150.
	26	Billed a company for bicycle rentals for an employee outing, $110
	27	Paid the fee for June to the Park District for the right to the bicycle concession, $100.
	28	Received cash for rentals during the week, $410.
	29	Paid the assistant for a weekend’s work, $150.
	30	Transferred $500 to personal checking account.

Answer 1

Journal Entries
Date	Account Titles and Explanation	Debit	Credit
Jun. 2	Cash	$7,200
	Hassab Rahim Capital		$7,200
	(To record the cash invested in the business)
Jun. 3	Supplies	$150
	Accounts Payable		$150
	(To record the purchase of supplies on account)
Jun. 4	Bicycles	$2,500
	Cash		$1,200
	Accounts Payable ($2,500 - $1,200)		$1,300
	(To record the purchase of bicycles by cash and on account)
Jun. 5	Shed	$2,900
	Cash		$2,900
	(To record the purchase of shed by cash)
Jun. 6	Shed	$400
	Cash		$400
	(To record the additional costs of shed)
Jun. 8	Cash	$470
	Rental Income		$470
	(To record the receipt of rental income earned)
Jun. 13	No entry is required as it is not a financial transaction
Jun. 14	Maintenance Expense	$75
	Cash		$75
	(To record the payment of maintenance expenses)
Jun. 15	Cash	$500
	Rental Income		$500
	(To record the receipt of rental income earned)
Jun. 16	Wages Expense	$150
	Cash		$150
	(To record the payment of wages expense)
Jun. 20	Accounts Payable	$150
	Cash		$150
	(To record the payment of accounts payable)
Jun. 21	Repair Expenses	$55
	Cash		$55
	(To record the payment of repairs expense)
Jun. 22	Cash	$550
	Rental Income		$550
	(To record the receipt of rental income earned)
Jun. 23	Wages Expense	$150
	Cash		$150
	(To record the payment of wages expense)
Jun. 26	Accounts Receivable	$110
	Rental Income		$110
	(To record the rental income is earned but not received)
Jun. 27	Concession Fees Expense	$100
	Cash		$100
	(To record the payment of concession fees expense)
Jun. 28	Cash	$410
	Rental Income		$410
	(To record the receipt of rental income earned)
Jun. 29	Wages Expense	$150
	Cash		$150
	(To record the payment of wages expense)
Jun. 30	Hassan Rahim, Withdrawals	$500
	Cash		$500
	(To record the drawings)