In: Accounting
On May 1, 2011, Javier Munoz opened Javier’s Repair Service. During the month, he completed the following transactions for the company:
May 1 Began business by depositing $5,000 in a bank account in the name of the company in exchange for 500 shares of $10 par value common stock.
1 Paid the rent for the store for current month, $425.
1 Paid the premium on a one-year insurance policy, $480.
2 Purchased repair equipment from Chmura Company, $4,200. Terms were $600 down and $300 per month for one year. First payment is due June 1.
5 Purchased repair supplies from Brown Company on credit, $468.
8 Paid cash for an advertisement in a local newspaper, $60.
15 Received cash repair revenue for the first half of the month, $400.
21 Paid Brown Company on account, $225.
31 Received cash repair revenue for the last half of May, $975.
31 Declared and paid a cash dividend, $300.
Required for May
1. Prepare journal entries to record the May transactions.
2. Open the following accounts: Cash (111); Prepaid Insurance (117); Repair Supplies (119); Repair Equipment (144); Accumulated Depreciation – Repair Equipment (145); Accounts Payable (212); Common Stock (311); Dividends (313): Income Summary (314); Repair Revenue (411); Store Rent Expense (511); Advertising Expense (512); Insurance Expense (513); Repair Supplies Expense (514); and Depreciation Expense – Repair Equipment (515). Post the May journal entries to the ledger accounts.
3. Using the following information, record adjusting entries in the general journal and post to the ledger accounts:
a. One month’s insurance has expired
b. The remaining inventory of unused repair supplies is $169.
c. The estimated depreciation on repair equipment is $70.
d. Estimated income taxes, $50.
4. From the accounts in the ledger, prepare an adjusted trial balance. (Note: Normally, a trial balance is also prepared before adjustments but is omitted here to save time).
5. From the adjusted trial balance, prepare an income statement, a statement of retained earnings, and a balance sheet for May.
6. Prepare and post closing entries.
7. Prepare a post-closing trial balance.
Second Part:
During June, Javier Munoz completed these transactions for Javier’s Repair Service:
June 1 Paid monthly rent. $425.
1 Made the monthly payment to Chmura Company, $300.
6 Purchased additional repair supplies on credit from Brown Company, $863.
15 Received cash repair revenue for the first half of the month, $914.
20 Paid cash for an advertisement in the local newspaper, $60.
23 Paid Brown Company on account, $600.
30 Received cash repair revenue for the last half of the month, $817.
30 Declared and paid a dividend, $300.
8. Prepare and post journal entries to record the June transactions.
9. Using the following information, record adjusting entries in the general journal and post to the ledger accounts:
a. One month’s insurance has expired
b. The remaining inventory of unused repair supplies is $413.
c. The estimated depreciation on repair equipment is $70.
d. Estimated income taxes, $50.
10. From the accounts in the ledger, prepare an adjusted trial balance. (Note: Normally, a trial balance is also prepared before adjustments but is omitted here to save time).
11. From the adjusted trial balance, prepare an income statement, a statement of retained earnings, and a balance sheet for June.
12. Prepare and post closing entries.
13. Prepare a post-closing trial balance.