Question

(Steven’s Bikes began operations in April 2017 and had the following transactions.

Owner invested $120,000 cash and a truck worth $36,000 in exchange for stock.

Paid $84,000 cash for 6 months’ rent.

Purchased $300,000 of bicycle inventory on credit.

Sold bicycles for cash of $507,000. The cost of the bikes sold was $180,000.

Sold and invoiced bicycles to a client for $95,400. The cost of the bikes sold was $48,000.

Paid $90,000 cash for an advertising campaign in connection with Tour de France. The campaign will run over the next two of months.   

Paid $24,000 in cash for supplies to have on hand for bike repairs.

Collected $60,000 from accounts receivable.

Paid for bikes purchased on credit in Transaction c above.

Paid cash dividends of $3,000.

Received $6,000 cash from a customer as a deposit for a custom bicycle to be built.

Required: Record each transaction a) through k) in the financial statements effects template, below.

Balance Sheet

Income Statement

Transaction

Cash Asset

+

Noncash Assets

=

Liabil- ities

+

Contrib. Capital

+

Earned Capital

Rev-enues

–

Expen- ses

=

Net Income

=

–

=

=

–

=

=

–

=

=

–

=

=

–

=

=

–

=

=

–

=

=

–

=

=

–

=

=

–

=

=

–

=

Answer 1