In: Accounting
Jan Wei owns a cycle store that sells equipment, clothing, and other accessories. During the month of June, the following activities occurred:
1.The business earned $30,000 from the sale of bicycles, clothing, and accessories. Half the sales were for cash and the other half was on account.
2.The merchandise that was sold originally cost $17,400.
3.Jan purchased additional merchandise on credit for $20,800.
4.Jan paid $18,000 to the suppliers of the merchandise purchased above.
5.The telephone, electricity, and water bills for the month came to $430. All but one of these bills, for $130, was paid by the end of the month.
6.Additional expenses for the month, including depreciation expense of $600, totalled $2,100. They were all paid in cash, except the depreciation expense, and were for repairs and maintenance done to the store.
7.At the end of May, Jan had an 8% loan for $5,000 outstanding with the bank. On the last day of June, Jan paid the monthly interest that was owed on the loan, and also paid $500 on the loan principal.
8.On the last day of June, a customer ordered a $1,300 bicycle. Jan did not have it in stock, so it was ordered and will be delivered in July. Since it was a special order, the customer paid a $300 deposit on it.
Required
Referring to the concepts discussed so far in this textbook:
a.
Prepare journal entries for each transaction or adjustment
b.
Calculate the net income for the month.
Date | Accont title and explanation | Debit | Credit |
1 | Cash | $ 15,000 | |
Accounts receivable | $ 15,000 | ||
Sales revenue | $ 30,000 | ||
2 | Cost of goods sold | $ 17,400 | |
Inventory | $ 17,400 | ||
3 | Inventory | $ 20,800 | |
Accounts payable | $ 20,800 | ||
4 | Accounts payable | $ 18,000 | |
Cash | $ 18,000 | ||
5 | Utilities expense | $ 430 | |
Cash | $ 300 | ||
Utilities payable | $ 130 | ||
6 | Repairs and maintenance expense | $ 1,500 | |
Cash | $ 1,500 | ||
Depeciation expense | $ 600 | ||
Accumulated depreciation | $ 600 | ||
7 | Interest expense(5000 x 8%*1/12) | $ 33 | |
loan | $ 500 | ||
Cash | $ 533 | ||
8 | Unearned sales revenue | $ 300 | |
Cash | $ 300 | ||
b.
Income statement | ||
For the month ended June | ||
Sales | $ 30,000 | |
Less: cost of goods sold | 17,400 | |
Gross Profit | 12,600 | |
Less: Operating expenses | ||
Utilities expense | 430 | |
Repairs and maintenance expense | 1,500 | |
Depeciation expense | 600 | |
Interest expense | 33 | |
Total operating expenses | 2,563 | |
Net Income | $ 10,037 |