Question

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

Mar.?1	Issued 10,000 shares of common stock for $15,000 cash.
1	Borrowed $6,000 cash by signing a 6-month, 6%, $6,000 note payable. Interest will be paid the first day of each subsequent month.
1	Purchased used truck for $8,000 cash.
2	Paid $1,500 cash to cover rent from March 1 through May 31.
3	Paid $2,400 cash on a 6-month insurance policy effective March 1.
6	Purchased cleaning supplies for $2,000 on account.
14	Billed customers $3,700 for cleaning services performed.
18	Paid $500 on amount owed on cleaning supplies.
20	Paid $1,750 cash for employee salaries.
21	Collected $1,600 cash from customers billed on March 14.
28	Billed customers $4,200 for cleaning services performed.
31	Paid $350 for gas and oil used in truck during month (use Maintenance and Repairs Expense).
31	Declared and paid a $900 cash dividend.

The chart of accounts for Lars 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.

Instructions

(a) Journalize the March transactions.

(b) Post to the ledger accounts. (Use T-accounts.)

(c) Prepare a trial balance at March 31.

(d) Journalize the following adjustments.

1. Services performed but unbilled and uncollected at March 31 was $200.

2. Depreciation on equipment for the month was $250.

3. One-sixth of the insurance expired.

4. An inventory count shows $280 of cleaning supplies on hand at March 31.

5. Accrued but unpaid employee salaries were $1,080.

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.

(e)  Post adjusting entries to the T-accounts.

(f)  Prepare an adjusted trial balance.
(g) Prepare the income statement and a retained earnings statement for month of March 2017 and a classified balance sheet at March 31, 2017

Answer 1

Answer A Journal Entries Date Particulars Debit Credit Mar-01 Cash $       15,000 Common Stock $       15,000 Mar-01 Cash $         6,000 Note Payable $         6,000 Mar-01 Truck $         8,000 Cash $         8,000 Mar-02 Prepaid Rent $         1,500 Cash $         1,500 Mar-03 Prepaid Insurance $         2,400 Cash $         2,400 Mar-06 Supplies $         2,000 Accounts Payable $         2,000 Mar-14 Accounts Receivable $         3,700 Service Revenue $         3,700 Mar-18 Accounts Payable $             500 Cash $             500 Mar-20 Salaries and Wages Expense $         1,750 Cash $         1,750 Mar-21 Cash $         1,600 Accounts Receivable $         1,600 Mar-28 Accounts Receivable $         4,200 Service Revenue $         4,200 Mar-31 Maintenance and Repairs Expense $             350 Cash $             350 Mar-31 Dividends $             900 Cash $             900

Answer B and E Ledger accounts Cash Mar-01 $         15,000 Mar-01 $     8,000 Mar-01 $           6,000 Mar-02 $     1,500 Mar-21 $           1,600 Mar-03 $     2,400 Mar-18 $        500 Mar-20 $     1,750 Mar-31 $        350 Mar-31 $        900 Balance $     7,200 $         22,600 $ 22,600 Common Stock Balance $         15,000 Mar-01 $ 15,000 Note Payable Balance $           6,000 Mar-01 $     6,000 Truck Mar-01 $           8,000 Balance $     8,000 Prepaid Rent Mar-02 $           1,500 Rent Expense $        500 Balance $     1,000 $           1,500 $     1,500 Prepaid Insurance Mar-03 $           2,400 Insurance expense $        400 Balance $     2,000 $           2,400 $     2,400