Question

Based on information given in the attached Excel document, 1. Prepare journal entries and adjusting entries for September 2019 for your company. 2. Set up T-accounts and post your journal entries and adjusting entries to T-accounts. 3. Prepare your company’s pre-closing trial balance, as of September 30, 2019. 4. Prepare an income statement, in a good format, for the month of September 2019 for your company. 5. Prepare a statement of retained earnings, in a good format, for the same period. 6. Prepare a balance sheet, in a good format, as of September 30, 2019 for your company. 7. Prepare closing entries and a post-closing trial balance, as of September 30, 2019.

Description of the Business Activity:

1. You, the owner(s), contributed $1,000 cash to the business on September 1. 2. On September 1, your company borrowed $21,000 from a local bank, on a 10% note for 5 years. The interest would be paid semi-annually on each March 1 and September 1. 3. On September 1, your company paid $900 fees to local government agencies for business licenses and permits, for a period of one year. 4. On September 1, your company acquired a mobil cart, a business sign, and some other equipment for a total of $4,200 (all paid in cash). You estimated that the lifetime of these PP&E was 2 years with a residual value of $200. 5. On September 1, your company also paid $1,500 for its annual insurance, starting September 1. 6. During September, your company acquired merchandise, totaled $35,000. At the time of purchases, 70% of the merchandise was acquired on account. Your company promised to pay the remaining balances in 20 days. 7. For merchandise purchases in Transaction 6, toward the end of September, your company also paid in cash, an additional 20% of the total merchandise prices to its suppliers. 8. During September, your company delivered merchandise and earned $50,000 sales revenue, of which 30% was on credit. Cost, to your company, of the merchandise sold, was $27,000. 9. On September 26, your company also signed a sales contract with a customer, Mini-Soda Company to deliver a total of $5,000 merchandise on October 7, 2019. Your company collected $2,000 cash in advance from this customer on September 26. 10. By the end of September, your company collected 50% of its accounts receivables from various customers from the abovementioned Transaction 8. 11. By the end of September, your company incurred and paid a total of $8,000 in cash for its other selling expenses (including advertising, marketing, payroll, cart transportation, trailer rental, etc.).

Additional Information:

12. Your company incurred monthly interest expense on its debt borrowing as described in Transaction 2. 13. At the end of September, your prepayment, from Transaction 3, on business licenses and permits expired for the month. 14. As described in Transaction 4, your company's PP&E had an estimated life of 2 years with a $200 residual value. Your company used the straight-line depreciation method. 15. At the end of September, your prepayment, from Transaction 5, on insurance expired for the month. 16. At the end of September, your company estimated 10% of its outstanding accounts receivables as possible uncollectible. 17. The income tax rate was 20% for your company, which would be paid in March 2020.

Answer 1