Question

Misty Mark, an infamous archer, decided to open an archery and fitness business called Bows and Biceps. The following is a list of transactions for Bows and Biceps for the first month. Put the transactions in a T account ledger and then create a trial balance, Income Statement, Statement of Owner’s Equity, and Balance Sheet on 5/31/20.

1. 5/1/2020 - Deposited $10,000 into a bank account in the name of the business.
2. 5/1/2020 - Signed a one-year lease for a building and paid the first six month’s rent of $4,200.
3. 5/2/2020 - Bought equipment from Archery Supply, Inc for $2,000.
4. 5/10/2020 - Enrolled 10 students in a Bow Hunting for Beginners class to be held on 5/29. Each student paid $50 for the class
5. 5/15/2020 - Misty gives her personal exercise equipment with a fair market value of $3,000 to the business.
6. 5/25/2020 - Enrolled 10 students in a Fit to Shoot class to be held next month. Each student paid $25 for the class.
7. 5/28/2020 - Purchased $500 in office supplies from Andy’s Office Supply on credit. Half of the supplies were used immediately, the other half was stored in the supply closet for future use.
8. 5/31/2020 - Misty withdraws $1,000 to take a vacation after working so hard to set up the business.

Answer 1

Prepare journal entries as follows:

Trn.	Date	Account Titles	Debit	Credit
a)	05/01/2020	Cash	$10,000
		Bows and Biceps, capital		$10,000
b)	05/01/2020	Prepaid Rent	$4,200
		Cash		$4,200
c)	05/02/2020	Equipment	$2,000
		Accounts supply		$2,000
d)	05/10/2020	Cash [10 students × $50]	$500
		Unearned service revenue		$500
e)	05/15/2020	Equipment	$3,000
		Bows and Biceps, capital		$3,000
f)	05/25/2020	Cash [10 students × $25]	$250
		Unearned service revenue		$250
g)	05/28/2020	Office Supplies	$250
		Supplies Expense	$250
		Accounts payable		$500
h)	05/31/2020	Bows and Biceps, withdrawals	$1,000
		Cash		$1,000

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Prepare t-accounts as follows:

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Prepare financial statement as follows:

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