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

Cash Account

5/1/20	To Capital	10,000	5/1/20	By Prepaid Rent	4,200
5/10/20	To Unearned revenue (10×50)	500	5/31/20	By Drawings	1000
5/25/20	To Unearned Revenue (10×25)	250	5/28/20	By office supplies	500
				By balance cd	5,050
		10750			10750

Prepaid Rent

5/1/2020	To Cash	4,200	5/31/20	By Rental Expense (4200/6)	700
				By balance cd	3,500
		4,200			4,200

Equipment

5/2/20	To Archery Supply	2,000	5/31/20	By balance cd	2,000
		2,000			2,000

Exercise Equipment

5/15/20	To Capital	3,000	5/31/20	By Balance cd	3,000
		3,000			3,000

Unearned Revenue

5/29/20	To Service Revenue	500	5/10/20	by cash	500
5/31/20	To balance cd	250	5/25/20	by cash	250
		750			750

Capital Account

5/1/20	To balance cd	13,000	5/1/20	By Cash	10,000
				By Exercise equipment	3,000
		13,000			13,000

Trial Balance ($)

	Debit	Credit
Capital		13,000
Cash	5,050
Drawings	1,000
Unearned Revenue		250
Service Revenue		500
Office supplies	250
Office supplies expenses	250
Exercise equipment	3,000
Equipment	2,000
Prepaid rent	3,500
Rental expense	700
Accounts Payable		2,000
	15,750	15,750

Income Statement ($)

Service Revenue	500
Less: Operating expenses
Rental expenses	700
Office supplies expenses	250
Net Income/(loss)	(450)

Balance Sheet ($)

Assets:
Exercise Equipment	3,000
Other Equipment	2,000
Cash	5,050
Office supplies	250
Prepaid Rent	3,500
Total	13,800
Laibailities and equity
Accounts Payable	2,000
Unearned Revenue	250
Total Equity	11,550
Total	13,800