Question

On December 1, Bob waldo started an auto repair shop, Waldo’s Quality automotive. The following transactions occurred during December:

12/01 Waldo contributed $70,000.00 cash to the business in exchange for common stock.

12/01 Paid 1,750.00 for a five -month insurance policy, starting December 1^st.

12/01 Purchased $12,000.00 of equipment, paying cash

12/09 Paid $20,000.00 cash to purchase land

12/10 Purchased office supplies on account for $2,800.00

12/19 Borrowed $15,000.00 from the bank. Waldo signed a note payable. The note is due in 5 years.

12/22 Paid 1,300.00 for advertising expenses

12/26 Paid 900.00 on account

12/28 The business received a $280.00 bill for utilities. The bill is to be paid in January.

12/31 Revenues earned during the month included $16,000.00 in cash, and $3,600.00 on account.

12/31 The business received $1440.00 for auto screening services to be performed next month.

12/31 Paid cash dividends of $5,500.00 to stockholders.

12-31 Paid employees’ salaries $3,800.00, and Building rent #1,200.00, record as a compound entry.

Adjustment data:

1. Office supplies used during the month, $1,800.00
2. Depreciation for the month, $200.00
3. One month of insurance has expired
4. Accrued interest expense, $75.00

Use the information furnished above to:

Write journal entries

Prepare an Income statement

Prepare a statement of retained earnings

Prepare the balance sheet

Prepare closing entries

Answer 1