Question

Calculate the following measurements: working capital, current ratio, profitability rate/percentage, and net income percentage. Comment with 2-3 sentences about how your business is performing after one month of operations.

You opened a new pet supplies store and named it Ozzie’s Pet Supply and Boarding on December 1, 2019. The following information about December’s transactions, accounts, and adjustment data is available.

Transactions:
Dec. 1 Family members contributed $50,000 cash to the business in exchange for capital.

Dec. 2 Purchased $10,800 of equipment for the store paying cash.

Dec. 3 Paid $4,500 for a 9-month insurance policy starting on December 1.

Dec. 4 Paid $18,000 cash to purchase land to be used in operations.

Dec. 5 Purchased office supplies on account, $3,000.

Dec. 6 Borrowed $28,000 from the bank for business use. You signed a bank payable note for an interest rate of 5% APR.

Dec. 7Paid $800 for advertising expenses.

Dec. 8 Purchased inventory (dog food) for the store at a cost of $1,500

Dec. 9 Paid for office supplies $3,000

Dec 10 Received a bill for utilities to be paid in January, $200.

Dec 31 Service Revenues earned during the month included $18,500 cash and $2,000 on account.

Dec. 31 Sold one hundred percent of the dog food purchased on Dec. 8^th for $2,100 in cash.

Dec. 31 Paid employees' salaries $2,000 and building rent $800.

Dec. 31 Dividends of $200 were paid.

Dec. 31 Customer prepaid $1,000 for boarding services in January.

Accounts

Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Equipment; Accumulated Depreciation-Equipment; Land; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Bank Notes Payable; Family, Capital; Service Revenue; Dog Food Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense-Equipment; Inventory; COGS; Dividends; Service Charge-Bank; Uncollectible Accounts Expense; Allowance for Doubtful Accounts.

Adjustment Data

1. Office Supplies used during the month, $600.
2. Depreciation on the Equipment for the month should be calculated based on straight-line depreciation and a useful life of 4 years (zero residual).
3. One month insurance has expired.
4. Calculate accrued interest expense and make adjusting entry.
5. Service charge from bank totaled $25.
6. Sales Method for reserving for doubtful accounts was executed (Remember, only A/R balances are considered).

Answer 1

ekkarill92

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	Adjustment Date	Adjustment	Balance
Cash
Capital	Dec-01	50,000 Dr.	50,000 Dr.
Equipment	Dec-02	10800 Cr.	39200 Dr.
Insurance Expense	Dec-03	500 Cr.	38700 Dr.
Prepaid Insurance	Dec-03	4000 Cr.	34700 Dr.
Land	Dec-04	18000 Cr.	16700 Dr.
Supplies Expense	Dec-05	3000 cr.	13700 Dr.
Advertising Expense	Dec-07	800 Cr.	12900 Dr.
Bank Notes Payable	Dec-06	28000 Dr.	40900 Dr.
Inventory	Dec-08	1500 Cr.	39400 Dr.
Supplies Expense	Dec-09	3000 cr.	13700 Dr.
Service Revenue	Dec-31	18500 Dr.	32200 Dr.
Dog Food Revenue	Dec-31	2100 Dr.	34300 Dr.
Salaries Expense	Dec-31	2000 Cr.	32300 Dr.
Rent Expense	Dec-31	800 Cr.	31500 Dr.
Unearned Revenue	Dec-31	1000 Dr.	32500 Dr.
Family Capital
Cash	Dec-01	50,000 Cr.	50,000 Cr.
Equipment
Cash	Dec-02	10800 Dr.	10800 Dr.
Insurance Expense
Cash	Dec-03	500 Dr.	500 Dr.
Prepaid Insurance
Cash	Dec-03	4000 Dr.	4000 Dr.
Land
Cash	Dec-04	18000 Dr.	18000 Dr.
Supplies Expense
Cash	Dec-05	3000 Dr.	3000 Dr.
Cash	Dec-09	3000 Dr.	6000 Dr.
Pending Office Supplies	Dec-31	5400 Cr.	600 Dr.
Advertising Expense
Cash	Dec-07	800 Dr.	800 Dr.
Bank Notes Payable
Cash	Dec-06	28000 Cr.	28000 Cr.
Inventory
	Dec-08	1500 Dr.	1500 Dr.
	Dec-31	1500 Cr.	0
Utilities Payable
Utilities Expense	Dec-10	200 Cr.	200 Cr.
Utilities Expense
Utilities Payable	Dec-10	200 Dr.	200 Dr.
Service Revenue
Cash	Dec-31	18500 Cr.	18500 Cr.
Accounts Receivable	Dec-31	2000 Cr.	20500 Cr.
Accounts Receivable
Service Revenue	Dec-31	2000 Dr.	2000 Dr.
Dog Food Revenue
Cash	Dec-31	2100 Cr.	2100 Cr.
COGS
Cash	Dec-08	1500 Dr.	1500 Dr.
Salaries Expense
Cash	Dec-31	2000 Dr.	2000 Dr.
Rent Expense
Cash	Dec-31	800 Dr.	800 Dr.
Dividend
Cash	Dec-31	200 Dr.	200 Dr.
Unearned Reveneue
Cash	Dec-31	1000 Cr.	1000 Cr.
Pending Office Supplies
Supply Expense	Dec-31	5400 Dr.	5400 Dr.
Interest Payable
Interest Expenses	Dec-31	117 Dr.	117 Dr.
Interest Expense	Dec-31	117 Cr.	117 Cr.
Accumulated Depreciation
Depreciation	Dec-31	225 Cr.	225 Cr.
Depreciation
Accumulated Depreciation	Dec-31	225 Dr.	225 Dr.
Doubtful Account