You have been hired as a manager. Your duties include maintaining the store's financial records. ...
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You have been hired as a manager. Your duties include maintaining the store's financial records. The following transactions occurred in April 2012, the first month of operations:
a) Received cash of $40,000 total ($10,000 each) from four investors. Each investor received 100 shares of common stock. This took place on April 1.
b) Paid three months' rent for the store on April 1 at $2,000 per month (recorded as prepaid expenses).
c) Purchased ice cream and cones for $6,000 on account payable, due in 60 days. This took place on April 2.
d) Purchased supplies for $1,000 cash on April 2.
e) Received a two-year $11,000 loan at the bank. The note payable is dated April 2.
f) Used the money from (e) to purchase a computer for $3,000 (for record keeping and inventory tracking) and to purchase $8,000 of used furniture and fixtures for the store.
g) Placed a grand opening advertisement in the local paper for $600 cash.
h) Made sales in the first half of the month totaling $5,000: $4,250 was in cash and the rest was on accounts receivable. The cost of the ice cream sold was $2,000.
i) Made a $600 payment on accounts payable on April 18.
j) Incurred and paid employee wages of $2000 for the month of April.
k) Collected accounts receivable of $700 from customers.
l) Made a repair to one of the refrigerators for $300.
m) Made sales in the last half of the month for $6,000, all for cash. The cost of the ice cream sold was $2,400.
Recording Transactions, Posting to T-Accounts, Preparing Financial Statements, and Commenting on What Financial Statements Tell Potential Investors
Using the information provided above, complete the following for Audrey Jhingree's ice cream parlor. To complete this problem, you may choose to use the Assessment 2 Problem Template, which is linked in the Suggested Resources under the Capella Resources heading.
Set up appropriate T-accounts for cash, accounts receivable, supplies, inventory, prepaid expenses, equipment, furniture and fixtures, accounts payable, notes payable, contributed capital, sales revenue, cost of goods sold (expense), advertising expense, wage expense, and repair expense. All accounts begin with zero balances.
Record in the T-accounts the effects of each transaction for Audrey's shop in April, referencing each transaction in the accounts with the transaction letter. Show the ending balances in the T-accounts. Note that transactions (h) and (m) require two types of entries, one for sales and one for cost of goods sold. Prepare trial balances for 4/30/12.