During the summer of 2009, Theresa Babineaux began and incorporated a small lawn mowing service. The following information relates to the first two months of business.
Required:
(a) move up text
(1) Record the following transactions in Babineaux’s General Journal.
6/1 Babineaux invested $1,200 and a lawn mower worth $300 in the business.
6/1 Babineaux borrowed $400 on a 7-month, 6% (annual rate) note payable. Principal and interest are due on January 2, 2010.
6/2 Jones paid Babineaux $150. This amount was for Babineaux to mow Jones’s yard once a month for 3 months.
6/3 Babineaux placed a telephone order for $100 office supplies.
6/3 Babineaux bought $20 of gasoline.
6/5 The supplies ordered on 6/3 were received with an invoice for $100.
6/15 As of 6/15, Babineaux had mowed 30 lawns at $50 each. Twenty customers paid in cash, and the rest were billed for their balances.
6/18 Babineaux bought $20 of gasoline.
6/25 Babineaux paid $100toa ministorage facility to store the lawn mower for the month of July.
6/30 For the second half of June, Babineaux mowed 25 lawns at $50 each. Twenty customers paid in cash, and the rest were billed for their balances.
6/30 Babineaux received $300 from customers who had been billed.
6/30 Babineaux took $500 in salary from the business.
7/2 Babineaux had to have the lawn mower repaired and received a bill for $60.
7/3 Babineaux bought $40 of gasoline.
7/10 Babineaux paid for half of the supplies received on 6/3.
7/30 During July, Babineaux mowed 65 more lawns at $50 each. Forty customers paid in cash, and the rest were billed for their balances.
7/31 Babineaux took $800 in salary from the business.
7/31 Babineaux paid the $200 lawnmower repair bill.
(2) Create a General Ledger and post the entries to it. Calculate ledger account balances.
(3) Prepare a trial balance. (Checkpoint: Trial Balance totals = $7,800)
(b) move up text
(1) Make the appropriate adjusting entries for the following information.
7/31 Babineaux has $60 of supplies remaining.
7/31 Babineaux has $6 of gas remaining.
7/31 Babineaux has mowed Jones’s yard twice.
7/31 Other necessary adjustments were made. The lawnmower depreciates at $25 per month.
(2) Post the adjusting entries to the General Ledger and calculate account balances.
(3) Prepare an adjusted trial balance. (Checkpoint: Trial Balance totals = $8,104)
(c) move up text(1) Prepare an Income Statement. (Checkpoint: Net Income = $4,472)
(2) Prepare a Statement of Stockholders’ Equity.
(3) Prepare a Balance Sheet. (Checkpoint: Total Assets = $6,426)
(d) move up text(1) Prepare the closing entries in the General Journal.
(2) Post the closing entries to the General Ledger and calculate account balances.
(3) Prepare a post closing trial balance. (Checkpoint: Trial Balance totals = $6,476)