Ike Petrov started a tour company, Tour-Along, on October 1, 2014. The following activities occurred during November, the second month of operations:
Nov. 1 Paid $10,000 regarding purchases made on account during October.
2 Purchased a $34,000 photocopier, paying $6,000 cash and signing a note payable for the balance.
3 Purchased office supplies for cash; $800.
4 Signed a $200,000 contract with RBC to arrange travel for its employees beginning January 1, 2015.
14 Paid wages of $6,000.
20 Collected $14,000 for clients travelling in November.
25 Ike Petrov withdrew $2,000 cash for personal use.
30 Paid interest on the notes payable; $150.
Required
1. Prepare General Journal entries to record the November transactions.
2. Set up the following T-accounts, entering the balances brought forward from October 31, 2014: Cash (101) $26,000; Office Supplies (124) $900; Office Equipment (163) $36,000; Accounts Payable (201) $43,000; Notes Payable (205) $20,000; Ike Petrov, Capital (301) $8,000; Ike Petrov, Withdrawals (302) $4,000; Travel Revenue (401) $34,000; Wages Expense (623) $38,000; and Interest Expense (633) $100.
3. Post the entries to the accounts; calculate the ending balance in each account.
4. Prepare a trial balance at November 30, 2014.
5. Use the trial balance to prepare an income statement and statement of changes in equity for the two months ended November 30, 2014, as well as a balance sheet at November 30, 2014.
Analysis Component: Part 2 of the Required states that the account Ike Petrov, Capital had a balance of $8,000 at October 31, 2014. Explain what this balance represents.