Question

Part 2 – General Journal (LO3-2) – Post the following journal entries to the general journal. ?

Trans:

May 1 Sell 100,000 shares of common stock for $100,000 to obtain the funds necessary to start your business. ?

May 1 Borrow $50,000 from the bank and sign a note promising to repay the full amount of the debt in 5 years. ?

May 1 Issue 1,000 shares of $2 par value preferred stock at $30/share. ?

May 1 ? Purchase equipment for business operations for $25,000. ?

May 1 Pay one year of rent in advance, $12,000 ($1,000 per month.) ? ?

May 3 ? Purchase supplies on account, $1,000. ? ?

May 3 Purchase 200 units of inventory with cash.

May 6 Provide 30 hours of services to customers for cash. ?? ? ?

May 10 ? Sell 200 units of inventory on account. (Perpetual method = 2 entries)

May 12 Sell 50 units of inventory to a customer on account with a sales discount of 2/10, n/30. ?

May 15 Purchase an additional 300 units of inventory on account.

May 20 The customer who purchased product on May 12th pays the amount due (within discount period). ? ??

May 23 ? Receive cash in advance for 20 hours of services to be completed in the future. ?

May 31 Sell 200 units of inventory to a customer who signs a 6 month promissory note at 10% interest for the balance due. ??

May 31 ? Pay employee salaries, $1,000. ? ?

May 31 Pay cash dividends to shareholders, $800. ?

Part 3 – General Ledger (LO3-2) – Post the information from the journal entries into the general ledger.

Part 4 – Trial Balance (LO3-2) – Prepare a trial balance from the information in the general ledger.

Part 2 cont. – Adjusting journal Entries – (LO3-3) – Post the following adjusting entries to the general journal

Adj-1    Mar 31 Record the portion of the Prepaid Rent used in May

Adj-2    Mar 31 The company has $300 of supplies left at month end

Adj-3    May 31 Record one month of depreciation on the equipment. The equipment has a useful life of 10 years.

Adj-4    May 31 Provide 10 hours of services that were paid in advance on May 23rd.

Adj-5    May 31 Record the receipt of a $300 utilities bill due on June 5th.

Adj-6    May 31 Record accrued interest on the $20,000 – 5 year note payable. The annual interest rate is 10%.

Part 3 cont. – General Ledger - Post the adjusting entries to the General Ledger.

Part 5 – Adjusted Trial Balance (LO3-3) – Post the ending balances from the General Ledger to the Adjusted Trial Balance. Debits should equal credits if you have done the prior steps correctly.

Part 6 – Prepare the end of month Income Statement (LO3-4).
Part 7 – Prepare the end of month Retained Earnings Statement (LO3-4).

Part 8 – Prepare the end of month Balance Sheet (LO3-4).
Part 1 cont. - Add the following closing entries to the general journal (LO3-4):

Clo-1    Apr. 30 Close out revenues/income

Clo-2    Apr. 30 Close out expenses/losses

Clo-3    Apr. 30 Close out dividends

Part 2 cont. - Post the above closing entries to the general ledger (LO3-4).

Part 9 – Prepare a post-closing trial balance (LO3-4).

Service Price= $ 75.00

Sales Price= $ 50.00

Inventory Cost= $ 20.00

Answer 1