Question

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

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.

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

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

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

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

Part 1.

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

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	$	$

3. Prepare an income statement for the month of January 31.

Red Robin Messenger Service
Income Statement
For the Month of January
Service revenue	$
Gas and oil expense
Net income	$

4. Prepare a classified balance sheet at January 31.

Red Robin Messenger Service
Balance Sheet
January 31
Assets
Current assets:
Cash	$
Accounts receivable
Total current assets		$
Property, plant, and equipment:
Delivery trucks	$
Warehouse
Land
Total property, plant, and equipment
Total assets		$
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$
Long-term debt:
Notes payable
Total liabilities		$
	$
Total stockholders' equity
Total liabilities and stockholders' equity		$

Answer 1

1.

Prepare journal entry as follows:

Date	Account Titles	Debit	Credit
Jan. 02	Cash [100,000 shares × $1]	$100,000
	Common stock		$100,000
Jan. 04	Cash	$59,000
	Note payable		$59,000
Jan. 03	Land	$20,000
	Warehouse	$69,000
	Cash		$89,000
Jan. 06	Delivery Truck	$45,000
	Cash		$45,000
Jan. 31	Accounts Receivable	$15,900
	Service revenue		$15,900
Jan. 31	Gas and ail expense	$3,230
	Cash		$3,230
Jan. 31	Cash	$7,490
	Accounts Receivable		$7,490

_________________________________________________________________________

Prepare trial Balance as follows:

___________________________________________________________________

Prepare Income statement as follows:

_____________________________________________________________________

Red Robin Messenger Service
Balance Sheet
Jan. 31
Assets
Current assets:
Cash	$29,260
Accounts receivable	$8,410
Total current assets		$37,670
Property, plant, and equipment:
Delivery trucks	$45,000
Warehouse	$69,000
Land	$20,000
Total property, plant, and equipment		$134,000
Total assets		$171,670
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$0
Long-term debt:
Notes payable	$59,000
Total liabilities		$59,000
Stockholders' equity:
Common stock	$100,000
Retained earnings	$12,670
Total stockholders' equity		$112,670
Total liabilities and stockholders' equity		$171,670

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