Question

Stockholders invested $30,000 cash in Pete's Auto Repair Shop, Inc., on April 1, 2012. Pete's Auto Repair employs expert mechanics specializing in analyzing automobile engines. Pete's Auto Repair transactions for April 2012 were as follows:
         
a.      Borrowed $16,000 from the bank and gave a note due in 90 days.
b.      Purchased equipment for cash of $20,000.
c.      Paid $2,000 cash to rent a building for the month of April.
d.      Rendered services for cash, $8,000.
e.      Rendered services on account, $4,800.
f.      Collected $800 cash on account.
g.      Paid the utilities bill for April, $1,200.
h.      Paid $1,600 for supplies used during the month.
i.      Purchased additional equipment on account, $4,000.
j.      Declared and paid dividends, $2,000.

Required:
a.      Prepare a summary of transactions for April. Use columns headed Cash, Accounts Receivable, Equipment, Accounts Payable, Notes Payable, Capital Stock, and Retained Earnings. You need not determine the balances in each column until the last item has been recorded.  Enter the $30,000 as the beginning balance in Cash and in Capital Stock.
b.   Prepare an income statement for the month of April.
c.   Prepare a balance sheet as of April 30, 2012.

Answer 1