Question

Listed below are the transactions for Ajayi Art, Inc. for the month of July:

July 1 Ajayi Art, Inc. is started with an investment of $250,000 cash.

July 1 Ajayi purchases office equipment for $22,250 by signing a 10% note (interest and principal to be paid over the next 12 months).

July 6 Pays rent for the art gallery in advance for the next three months with a check for $3,000.

July 8 Purchases art supplies from Wacky Art Co. on credit for $10,300.

July 9 Receipt of $3,500 from a customer who has commissioned a piece of custom art to be completed by the end of the year.

July 11 Pays miscellaneous office expenses totaling $375 in cash.

July 13 Bills customers $4,300 for art classes provided in June.

July 15 Pays $3,500 to Wacky Art Co.

July 20 Receives $1,900 from customers on account.

July 30 Ajayi records $3,800 in salaries for the month of July. Paychecks will be disbursed to employees on August 2nd.

Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies on Hand, Office Equipment, Accumulated Depreciation, Accounts Payable, Common Stock, Service Revenue, Rent Expense, Miscellaneous Office Expense, Office Salaries Expense, Supplies Expense, Depreciation Expense, and Income Summary.

Prepare an unadjusted trial balance.

Record depreciation using a 5-year life on the office equipment, the straight-line method, and no salvage value. Round to whole numbers. Also, record an adjustment for art supplies used in the amount of $1,510 and record interest expense for the note.

Prepare an adjusted trial balance.

Prepare an income statement, a statement of retained earnings, and an unclassified balance sheet.

Prepare closing entries.

provide an explanation to the management team on July's financial performance.

Answer 1

ans 2 , 3 and 4
Unadjusted Trial Balance			Adjusting entries		Adjusted Trial balance
	Dr	Cr	Dr	Cr	Dr	Cr
Cash	$248,525				$248,525
Accounts receivable	$2,400				$2,400
Supplies	$10,300			1510	$8,790
Prepaid Rent	3000			1000	$2,000
Equipment	$22,250				$22,250
Accumulated Depreciation				371		371
Accounts Payable		$6,800				6800
Salaries Payable		3800				3800
Interest payable				185		185
Notes Payable		$22,250				22250
Common stock		$250,000				250000
Service revenue		7800				7800
Salaries expenses	3800				$3,800
Rent expenses			1000		$1,000
Depreciation expenses			371		$371
Interest expenses			185		$185
Supplies expenses			1510		$1,510
Miscellaneous Office Expense	375				$375
Total	$290,650	$290,650	$3,066	$3,066	$291,206	$291,206

Dear student I have answered the first four sub parts