Question

Transaction: 1)     October 1, 2016: Opened a bank account for Craft Fair rentals with $100.

2)     October 1, 2016: Took out a loan $14,000 from Best Bank and deposited it into the account to pay for expenses. Record as Best Bank Loan payable.

3)     October 1, 2016: Bought 20 folding tables from Staples for $1,500 on account. Expect the tables to last 3 years with no disposal value

4)     October 1, 2016: Bought 40 chairs from Staples for $1,200 on account. Expect the chairs to last 2 years with no disposal value

5)     October 2, 2016: bought 40 table cloths for $800 from Sears on account. Expect to last only 1 season, so expense.

6)     October 2, 2016: bought cleaning supplies for $97.00 from Super Store. Paid cash. Will use up within the year.

7)     October 5, 2016: Purchased a cash register for $2,500 from ABC Business Machines. It is expected to last 5 years.

8)     October 1, 2016: paid $6,000 for 3 months’ rental, (October 1 to December 31, 2017) to OK Hall rentals.

9)     October 31, 2016: Best Bank charge, interest on loan $33.33, other bank charges $7.50

10) October 31, 2016: Received $4,800 for the month for table rentals. All paid in cash.

11) October 31, 2016: Paid the Staples account $2,200.

12) October 31, 2016: Mr. Bro drew $3,000 out for his living expenses.

13) November 5, 2016: Paid Sears account $800.00 cash for table cloths. (see #5)

14) November 15, 2016: Paid “The Fix-it Man” $79.00 cash for repairs on the tables.

15) November 30, 2016: Sales invoice 1002 for table rentals of $9,000. $5,000 was paid in cash, balance on account.

16) November 30, 2016: Interest on loan, $33.33 and bank charges $7.50

17) November 30, 2016: Mr. Bro drew $3,000 out for his living expenses.

18) December 14, 2016: Received $4,000 cash for the balance of invoice #1002

19) December 15, 2016: Sales invoice 1003 for table rentals of $7,000. $5,000 in cash, balance on account.

20) December 29, 2016: Sales invoice 1004 for table rentals of $3,000, $1,000 in cash, balance on account.

21) December 30, 2016: Received $2,000 cash for payment of invoice 1003. (see # 20)

22) December 30, 2016: The Fix-it Man charged $58.00 for repairs. Will be paid in January.

23) December 31, 2016: Best Bank interest on loan of $33.33 and bank charges of $7.50.

24) December 31, 2016: Mr. Bro drew $3,000 out for his living expenses.

25) December 31, 2016: Paid $7,000 on the loan owing to Best Bank.

December 31, 2016: Computed amortization expense and accumulated amortization of $500 for the tables, $600 for the chairs and $500 for the cash registrar.

Q1:Prepare the journal entries to record the transactions.

a)Post the journal entries to a T-account

b) Prepare the trial balance

c) Prepare the income statement of the owner's equity for three months (Oct-December)

d) Prepare the balance sheet as of Dec. 31

e) Was the fall work successful? Should it continue in the fall 2017? Give reasons

Answer 1

Sl.No.	Date	Account Title	Debit	Credit
1	Oct.1	Cash	100
		Cash		100
2		Cash	14000
		Best Bank Loan payable		14000
3		Furniture& Fixtures	1500
		Account payable		1500
4		Furniture& Fixtures	1200
		Account payable		1200
8		Rent expenses	6000
		Cash		6000
5	Oct.2	Utilities expense	800
		Account payable		800
6		Cleaning supplies expense	97
		Cash		97
7	Oct.5	Furniture& Fixtures	2500
		Account payable		2500
9		Interest expense	33.33
		Miscellaneous expense	7.5
		Cash		40.83
10		Cash	4800
		Rental revenue		4800
11		Account Payable	2200
		Cash		2200
12		Bro Drawings	3000
		Cash		3000
13	Nov.5	Account payable	800
		Cash		800
14	Nov.15	Repair expenses	79
		Cash		79
15	Nov.30	Account Receivable	4000
		Cash	5000
		Rental revenue		9000
16		Interest expense	33.33
		Miscellaneous expense	7.5
		Cash		40.83
17		Bro Drawings	3000
		Cash		3000
18	14-Dec	Cash	4000
		Account Receivable		4000
19	15-Dec	Account Receivable	2000
		Cash	5000
		Rental revenue		7000
20	29-Dec	Account Receivable	2000
		Cash	1000
		Rental revenue		3000
21	30-Dec	Cash	2000
		Account Receivable		2000
22		Repair expenses	58
		Account payable		58
23	31-Dec	Interest expense	33.33
		Miscellaneous expense	7.5
		Cash		40.83
24		Bro Drawings	3000
		Cash		3000
25		Best Bank Loan payable	7000
		Cash		7000
26		Depreciation expense_Furn.& Fix.	1600
		Accumulated depn.Furniture & fixtures		1600
			76856.49	76856.49

		LEDGER ACCOUNTS			Net Ledger bal.
Sl.No.	Date	Account Title	Debit	Credit	Debit	Credit
		Account payable		1500
		Account payable		1200
		Account payable		800
		Account payable		2500
11		Account Payable	2200
13	Nov.5	Account payable	800
		Account payable		58		3058
15	Nov.30	Account Receivable	4000
		Account Receivable		4000
19	15-Dec	Account Receivable	2000
20	29-Dec	Account Receivable	2000
		Account Receivable		2000	2000
		Accumulated depn.Furniture & fixtures		1600		1600
		Best Bank Loan payable		14000
25		Best Bank Loan payable	7000			7000
12		Bro Drawings	3000
17		Bro Drawings	3000
24		Bro Drawings	3000		9000
1	Oct.1	Cash	100
		Cash		100
2		Cash	14000
		Cash		6000
		Cash		97
		Cash		40.83
10		Cash	4800
		Cash		2200
		Cash		3000
		Cash		800
		Cash		79
		Cash	5000
		Cash		40.83
		Cash		3000
18	14-Dec	Cash	4000
		Cash	5000
		Cash	1000
21	30-Dec	Cash	2000
		Cash		40.83
		Cash		3000
		Cash		7000	10501.51
6		Cleaning supplies expense	97		97
26		Depreciation expense-Furn.& Fix.	1600		1600
3		Furniture& Fixtures	1500
4		Furniture& Fixtures	1200
7	Oct.5	Furniture& Fixtures	2500		5200
9		Interest expense	33.33
16		Interest expense	33.33
23	31-Dec	Interest expense	33.33		99.99
		Miscellaneous expense	7.5
		Miscellaneous expense	7.5
		Miscellaneous expense	7.5		22.5
8		Rent expenses	6000		6000
		Rental revenue		4800
		Rental revenue		9000
		Rental revenue		7000
		Rental revenue		3000		23800
14	Nov.15	Repair expenses	79
22		Repair expenses	58		137
5	Oct.2	Utilities expense	800		800
			76856.49	76856.49	35458	35458

TRIAL BALANCE as at Dec 31
Cash	10501.51
Account Receivable	2000
Furniture& Fixtures	5200
Accumulated depn.Furniture & fixtures		1600
Account payable		3058
Best Bank Loan payable		7000
Bro Drawings	9000
Rental revenue		23800
Cleaning supplies expense	97
Depreciation expense-Furn.& Fix.	1600
Rent expenses	6000
Repair expenses	137
Utilities expense	800
Miscellaneous expense	22.5
Interest expense	99.99
Total	35458	35458
Income statement(Oct 1- Dec 31)
Rental revenue		23800
Less: Operating expenses:
Cleaning supplies expense	97
Depreciation expense-Furn.& Fix.	1600
Rent expenses	6000
Repair expenses	137
Utilities expense	800
Miscellaneous expense	22.5
Interest expense	99.99	8756.49
Net operating income		15043.51
Balance sheet as at Dec 31
Current Assets
Cash	10501.51
Account Receivable	2000
Total current assets		12501.51
Operating assets
Furniture& Fixtures	5200
Less: Accumulated depn.Furniture & fixtures	-1600	3600
Total assets		16101.51
Liabilities & Equity
Liabilities
Account payable	3058
Best Bank Loan payable	7000
Total liabilities		10058
Owner's Equity
Retained Earnings	15043.51
Less:Bro Drawings	-9000
Total equity		6043.51
Total Liabilities & Equity		16101.51

Yes. The work is successful & can be continued as it has earned positive net income