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ryMDC 1 M ms Dade C × / M Full Cycle Account Hom, x /1613f601 fad53b38?projector= 1 &messagePart1d-02; Open with Google Docs Student Name: ld No. I. Completing the Accounting Cycle: a. Record all necessaries entries. b. Make all necessaries journals Adjustments Build Adjustment Trial Balance and Adjustment Trial Balance c. d. Prepare all Financials Reports (4 Principals Reports) On December 1, Tim Walker began an auto repair shop. Walker\'s Quality Automotive. The following transactions occurred during December Dec. 1 Walker contributed $48,000 cash to the business in exchange for shares of common stock. 1 Purchased $10,000 of equipment paying cash Paid $ 1 ,500 for a 4-month insurance policy starting on December 1 9 Paid $20,000 cash to purchase land to be used in operations 10 Púrchased office supplies on account, $2,400 19 Borrowed $15,000 from the bank for business use. Walker signed a note payable to the bank in the name of the corporation. 22 Paid $1,300 for advertising expenses 26 Paid $600 on account 28 The business received a bill for utilities to be paid in January. $240. 31 Revenues earned during the month included $16,500 cash and $2,800 on account 31 Paid employees\' salaries $3,500 and bulding rent $1,000. Record as a 31 The business received $1,140 for auto screening services to be performed next 31 Cash dividends of $5,000 were paid to stockholders compound entry month Page 1 2 a + .xisxA

Solution

Answer 1 & 2. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Dec Cash      48,000.00 Common Stock      48,000.00 (record the purchase of common stock) 1-Dec Equipment      10,000.00 Cash      10,000.00 (record the purchase of equipment) 1-Dec Prepaid Insurance        1,600.00 Cash        1,600.00 (record the Insurance paid) 9-Dec Land      20,000.00 Cash      20,000.00 (record the purchase of land) 10-Dec Office Supplies        2,400.00 Accounts Payable        2,400.00 (record the purchase of supplies) 19-Dec Cash      15,000.00 Notes Payable      15,000.00 (record the amount borrowed from bank) 22-Dec Advertising Expenses        1,300.00 Cash        1,300.00 (record the advertising expenses) 26-Dec Accounts Payable            600.00 Cash            600.00 (Record the amount paid) 28-Dec Utilities Expense            240.00 Utilities Payable            240.00 (record the utilities expense) 31-Dec Cash      16,500.00 Accounts Receivable        2,800.00 Service Revenue      19,300.00 (record the service revenue earned) 31-Dec Salaries & Wages Expense        3,000.00 Rent Expense        1,000.00 Cash        4,000.00 (record the salaries and rent paid) 31-Dec Cash        1,140.00 Unearned Revenue        1,140.00 (record the service revenue received in adv.) 31-Dec Dividends        5,000.00 Cash        5,000.00 (record the dividends paid) Adjusting Entry 31-Dec Insurance Expense 400    Prepaid insurance 400    (record the insurance expense for Dec.) Answer 3. Walkers\' Quality Automotive Adjusted Trial Balance As of Dec 31 Dr. Amt. Cr. Amt. Cash         38,140.00 Office Supplies           2,400.00 Prepaid Insurance           1,200.00 Land         20,000.00 Accounts Receivable           2,800.00 Equipment         10,000.00 Accounts Payable           1,800.00 Utilities Payable               240.00 Unearned Service Revenue           1,140.00 Notes Payable         15,000.00 Common Stock         48,000.00 Dividends           5,000.00 Service Revenue         19,300.00 Salaries & Wages Expenses           3,000.00 Utilities Expenses               240.00 Advertising Expenses           1,300.00 Rent Expenses           1,000.00 Insurance Expense               400.00 Total         85,480.00         85,480.00                        -   Answer 4. Walkers\' Quality Automotive Income Statement For the Month Ended Dec 31 Revenue Service Revenue         19,300.00 Expenses Salaries & Wages Expenses           3,000.00 Utilities Expenses               240.00 Advertising Expenses           1,300.00 Rent Expenses           1,000.00 Insurance Expense               400.00 Total Expenses           5,940.00 Net Income         13,360.00 Walkers\' Quality Automotive Retained Earning Statement For the Month Ended Dec 31 Beginning Balance, Dec 1                        -   Net Income         13,360.00 Dividends         (5,000.00) Ending Balance - Dec 31           8,360.00 Walkers\' Quality Automotive Balance Sheet As of Dec 31 Assets Current Assets Cash         38,140.00 Office Supplies           2,400.00 Prepaid Insurance           1,200.00 Accounts Receivable           2,800.00 Total Current Assets         44,540.00 Property, Plant & Equipment Land         20,000.00 Equipment         10,000.00 Total Property, Plant & Equipment         30,000.00 Total Assets         74,540.00 Liabilities & Stockholders\' Equity Liabilities Current Liabilities Accounts Payable           1,800.00 Utilities Payable               240.00 Unearned Service Revenue           1,140.00 Total Current Liabilities           3,180.00 Long Term Liabilities Notes Payable         15,000.00 Total Liabilities         18,180.00 Stockholders\' Equity Common Stock         48,000.00 Retained Earnings           8,360.00 Total Stockholders\' Equity         56,360.00 Total Liabilities & Stockholders\' Equity         74,540.00 Walkers\' Quality Automotive Statement of Cash Flows (Indirect Method) For the Year ended Dec 31 Cash Flow from opearating activities: Net Income         13,360.00 Add/(Less) non cash effects on operating activities Increase in Accounts Receivables         (2,800.00) Increase in Prepaid Insurance         (1,200.00) Increase in Office Supplies         (2,400.00) Increase in Accounts Payable           1,800.00 Increase in Utilities Payable               240.00 Increase in Unearned Service Revenue           1,140.00         (3,220.00) Net Cash provided by operating activities         10,140.00 Cash flow from Investing Activities Purchase of Equipment      (10,000.00) Purchase of Land      (20,000.00) Net Cash provided by Investing activities      (30,000.00) Cash Flow from Financing Activities Issue of Common Stock         48,000.00 Cash dividend paid         (5,000.00) Issue of Notes Payable         15,000.00 Net Cash used by Financing activities         58,000.00 Net Increase / (Decrease) in Cash         38,140.00 Cash balance at the beginning - Dec 1                        -   Cash balance at the end - Dec 31         38,140.00