Question

Question: Complete all steps in accounting cycle. (LO 1, 2) AP Laura Eddy opened Eddy's Carpet Cleaners on ...

Complete all steps in accounting cycle.

(LO 1, 2) AP

Laura Eddy opened Eddy's Carpet Cleaners on March 1, 2017. In March, the following transactions were completed:

Mar. 1	Laura invested $10,000 cash in the business.
1	Purchased a used truck for $6,500, paying $1,500 cash and signing a note payable for the balance.
3	Purchased supplies for $1,200 on account.
5	Paid $1,200 on a one-year insurance policy, effective March 1.
12	Billed customers $4,800 for cleaning services.
18	Paid $500 of amount owed on supplies.
20	Paid $1,800 for employee salaries.
21	Collected $1,400 from customers billed on March 12.
25	Billed customers $2,500 for cleaning services.
31	Paid $375 for fuel for the month on the truck.
31	Withdrew $900 cash for personal use.

Instructions

(e)  

Prepare the income statement and statement of owner's equity for March, and a classified balance sheet at March 31, 2017. Of the note payable, $2,000 must be paid by March 1, 2018.

(f)  

Journalize and post the closing entries.

(g)  

Prepare a post-closing trial balance at March 31.

Answer 1

First of all we need to prepare analysis of transaction so we make horizontal Model of transaction analysis to get balances.

Eddy's Carpet Cleaners

Analyzing Transaction

For the month Ended March 31,2017

Date			Assets					=	Liabilities			+	Owner's		Equity
March	Cash	+	Accounts Receivable	+	Truck	Prepaid Insurance	Supplies	=	Accounts Payable	+	Notes Payable	+	Capital	-	Drawing	+	Service Revenue	-	Expenses
01	10,000							=		+		+	10,000
01	(1,500)			+	6,500			=		+	5,000
03							1,200	=	1,200
05	(1,200)					1,200		=
12		+	4,800					=								+	4,800
18	(500)	+						=	(500)
20	(1,800)	+						=										-	1,800
21	1,400	+	(1,400)					=
25		+	2,500					=								+	2,500
31	(375)	+						=										-	375
31	(900)	+						=						-	900
Total	$5,125	+	$5,900	+	$6,500	$1,200	$1,200	=	$700	+	$5,000	+	$10,000	-	$900	+	$7,300	-	$2,175

Eddy's Carpet Cleaners

Income Statement

For the month ended March 31,2017

Accounts	Amount	Amount
Service Revenue		$7,300
Less:- Expenses
Salaries Expenses	$1,800
Fuel Expenses	$375
Total Expenses		($2,175)
Net Income		$5,125

Eddy's Carpet Cleaners

Statement of Owner's Equity

For the month ended March 31,2017

Accounts Title	Amount
Capital, March 01,2017	$10,000
Less:- Drawings	($900)
Add:- Net Income	$5,125
Capital, March 31,2017	$14,225

Eddy's Carpet Cleaners

Balance Sheet

March 31,2017

Accounts	Amount	Amount
Assets:-
Current Assets:-
Cash	5,125
Accounts Receivable	5,900
Prepaid Insurance	1,200
Supplies	1,200
Total Current Assets		$13,425
Fixed Assets:-
Truck	6,500
Total Fixed Assets		$6,500
Total Assets		$19,925
Liabilities and Owner's Equity:-
Current Liabilities:-
Accounts Payable	700
Total Current Liabilities		$700
Long-term Liabilities:-
Notes Payable	5,000
Total Long-term Liabilities		$5,000
Owner's Equity:-
Capital, March 31,2017	14,225
Total Owner's Equity		$14,225
Total Liabilities and Owner's Equity		$19,925

Eddy's Carpet Cleaners

Closing Entries

March 31,2017

Date	Accounts Title	Debit	Credit
March 31	Service Revenue	$7,300
	Income Summary		$7,300
March 31	Income Summary	$2,175
	Salaries Expenses		$1,800
	Fuel Expenses		$375
March 31	Income Summary	$5,125
	Owners Equity		$5,125

Eddy's Carpet Cleaners

Post - Closing Trial Balance

March 31,2017

Accounts	Debit	Credit
Cash	5,125
Accounts Receivable	5,900
Prepaid Insurance	1,200
Supplies	1,200
Truck	6,500
Accounts Payable		700
Notes Payable		5,000
Capital, March 31,2017		14,225
Total	$19,925	$19,925