Question

Lars Linken opened Ayayai Cleaners on March 1, 2017. During March, the following transactions were completed.

Mar. 1		Issued 7,400 shares of common stock for $11,100 cash.
1		Borrowed $4,200 cash by signing a 6-month, 6%, $4,200 note payable. Interest will be paid the first day of each subsequent month.
1		Purchased used truck for $5,900 cash.
2		Paid $1,200 cash to cover rent from March 1 through May 31.
3		Paid $1,800 cash on a 6-month insurance policy effective March 1.
6		Purchased cleaning supplies for $1,480 on account.
14		Billed customers $2,740 for cleaning services performed.
18		Paid $370 on amount owed on cleaning supplies.
20		Paid $1,300 cash for employee salaries.
21		Collected $1,180 cash from customers billed on March 14.
28		Billed customers $3,110 for cleaning services performed.
31		Paid $260 for gas and oil used in truck during month (use Maintenance and Repairs Expense).
31		Declared and paid a $670 cash dividend.

The chart of accounts for Ayayai Cleaners contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Prepaid Rent, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Salaries and Wages Payable, Notes Payable, Interest Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Rent Expense, and Interest Expense.

1. Journalize the March transactions.

2. Post to the ledger accounts. (Post entries in the order of journal entries presented in the previous part.)

3. Prepare a trial balance at March 31.

4. Journalize the following adjustments. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

1.		Services performed but unbilled and uncollected at March 31 was $150.
2.		Depreciation on equipment for the month was $190.
3.		One-sixth of the insurance expired.
4.		An inventory count shows $210 of cleaning supplies on hand at March 31.
5.		Accrued but unpaid employee salaries were $800.
6.		One month of the prepaid rent has expired.
7.		One month of interest expense related to the note payable has accrued and will be paid April 1.

5. Post adjusting entries to the T-accounts.

6. Prepare an adjusted trial balance.

7. Prepare the income statement for March.

8. Prepare a retained earnings statement for March. (List items that increase retained earnings first.)

9. Prepare a classified balance sheet at March 31. (List Current Assets in order of liquidity.)

10. Journalize and post closing entries and complete the closing process. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For accounts that have zero ending balance, the entry should be the balance date and zero for the amount.)
11. Prepare a post-closing trial balance at March 31.

Answer 1

		GENERAL JOURNAL
	DATE		ACCOUNT TITLE	DEBIT	CREDIT
	MARCH	1	Cash	$11,000
			Common Stock		$11,000
		1	Cash	$4,200
			Notes Payable		$4,200
		1	Equipment	$5,900
			Cash		$5,900
		2	Prepaid Rent	$1,200
			Cash		$1,200
		3	Prepaid Insurance	$1,800
			Cash		$1,800
		6	Supplies	$1,480
			Accounts payable		$1,480
		14	AccountsReceivable	$2,740
			Service Revenue		$2,740
		18	Accounts payable	$370
			Cash		$370
		20	Salariesand wages expense	$1,300
			Cash		$1,300
		21	Cash	$1,180
			Accounts Receivable		$1,180
		28	AccountsReceivable	$3,110
			Service Revenue		$3,110
		31	Maintenance and Repair expense	$260
			Cash		$260
		31	Dividend	$670
			Cash		$670
			LEDGER ACCOUNTS
			CASH
	Date		Description	Debit	Credit
	March	1	Common Stock	$11,000
		1	Notes Payable	$4,200
		1	Equipment		$5,900
		2	Prepaid Rent		$1,200
		3	Prepaid Insurance		$1,800
		18	Accounts payable		$370
		20	Salariesand wages expense		$1,300
		21	Accounts Receivable	$1,180
		31	Maintenance and Repair expense		$260
		31	Dividend		$670
			ACCOUNTS RECEIVABLE
	Date		Description	Debit	Credit
	March	14	Service Revenue	$2,740
		21	Cash		$1,180
		28	Service Revenue	$3,110
			PREPAID RENT
	Date		Description	Debit	Credit
	March	2	Cash	$1,200
			PREPAID INSURANCE
	Date		Description	Debit	Credit
	March	3	Cash	$1,800
			SUPPLES
	Date		Description	Debit	Credit
	March	6	Accounts Payable	$1,480
			EQUIPMENT
	Date		Description	Debit	Credit
	March	1	Cash	$5,900
			NOTES PAYABLE
	Date		Description	Debit	Credit
	March	1	Cash		$4,200
			ACCOUNTS PAYABLE
	Date		Description	Debit	Credit
	March	6	Supplies		$1,480
		18	Cash	$370
			COMMON STOCK
	Date		Description	Debit	Credit
	March	1	Cash		$11,000
			DIVIDEND
	Date		Description	Debit	Credit
	March	31	Cash	$670
			SERVICE REVENUE
	Date		Description	Debit	Credit
	March	14	AccountsReceivable		$2,740
		28	AccountsReceivable		$3,110
			MAINTANANCE & REPAIR EXPENSE
	Date		Description	Debit	Credit
	March	31	Cash	$260
			SALARIES & WAGES EXPENSE
	Date		Description	Debit	Credit
	March	20	Cash	$1,300