8. Journalize and post closing entries

9. Prepare a post-closing trial balance

Create a T-Account for all accounts listed below. Don't forget to put them in color!!! Billy Bob's Bikes Corporation Chart of Accounts Ledger # February 28th Balance 176, 156 1,265 101 102 103 104 105 106 107 108 109 110 Account ASSETS Cash Accounts Receivable Inventory Supplies Prepaid Insurance Land Building Accum Depr. - Building Bike Machine Accum Depr.- Bike Machine $ $ $ $ $ $ $ $ 100,250 $ $ 201 202 203 204 205 LIABILITIES Notes Payable Accounts Payable Interest Payable Salaries Payable Income Tax Payable $ $ 301 302 303 OWNER'S EQUITY Common Stock Retained Earnings Dividends $ $ $ 266,560 11,111 401 402 403 REVENUES Sales Sales Returns & Allowances Sales Discounts $ $ $ 501 502 503 504 505 506 507 508 509 510 EXPENSES Cost of Goods Sold Depr. Exp. - Bike Machine Depr. Exp. - Building Freight-Out Income Tax Expense Insurance Expense Interest Expense Salaries Expense Supplies Expense Utilities Expense $ $ $ $ $ $ $ $ $ $ Billy Bob's Bikes Transactions 1. March 1: Billy Bob purchased a building for $573,696 using $33,696 cash and then borrowing the rest from the bank. The loan from the bank will be paid off over the next 15 years (1/15 of the principal will be paid off at the end of each year). The loan carries an interest rate of 7.72%. Interest accrued will be paid off at the end of every year. The building has an expected life of 24 years and will be depreciated using the straight-line method. 2. March 1: Billy Bob paid in advance for a 10-month insurance policy, which will begin today. He paid $6,660 cash for the policy. 3. March 2: Billy Bob purchased 14 bikes from Paul's Choppers. Each bike cost $6,300 and the credit terms are 3/10, n/30. (Note: Bikes are considered Inventory) 4. March 2: Paul's Choppers paid FedEx $5,083 cash to ship the bikes to Billy Bob. 5. March 3: Billy Bob hires Biker Betty for promotional purposes. He estimates her salary to be $12/hour. She will probably work 10 hours this month. 6. March 5: Billy Bob sold 8 bikes to Bikes R' Us for $7,850 each with credit terms of 2/10, n/30. The total cost of the bikes was figured out to be $50,400. 7. March 6: Billy Bob paid UPS $4,516 cash to ship the bikes to Bikes R' Us. 8. March 8: Stockholder's invest $175,075 into the company in exchange for Billy Bob's Bikes common stock 9. March 10: Billy Bob paid off the balance due from Paul's Choppers. 10. March 12: Billy Bob purchased 16 more bikes from Paul's Choppers. Each bike cost $6,225 and the credit terms are 1/20, n/60. 11. March 12: Billy Bob paid UPS $7,177 cash to ship the bikes he bought from Paul's Choppers. 12. March 14: Bikes R' Us paid their balance off for the bikes they purchased. 13. March 15: Billy Bob bought a Bike Making Machine for $407,100 using $47,100 cash and then borrowing the rest from the bank. The loan will be paid off over the next 3 years (1/3 of the principal will be paid at the end of each year). The loan carries an interest rate of 8.68 percent. Interest accrued will be paid off at the end of every year. The Bike Making Machine has an expected life of 11.5 years and will be depreciated using straight-line method. 14. March 16: Billy Bob sold 9 bikes to Biker's Bargains for $7,900 each with credit terms of 2/10 EOM, n/45. The cost of the bikes was determined to be $59,509. 15. March 16: Biker's Bargains paid FedEx $4,283 to have the bikes shipped to them. 16. March 18: Billy Bob purchased $3,099 worth of supplies from Olga's Office Supplies paying cash. 17. March 19: Billy Bob's pay period ends and he now owes his employees $5,304 in salaries. These salaries will be paid on March 25th. 18. March 20: Billy Bob returned 4 of the bikes he bought from Paul's Choppers. They credited $24,900 to his account. 19. March 21: Billy Bob's Bikes paid cash dividends of $5,555. 20. March 22: Billy Bob purchased 12 bikes from Carly's Cars. Each bike cost $5,999 and the credit terms are 2/10 EOM, n/90. 21. March 22: Billy Bob paid UPS $6,782 to have the bikes shipped to him. 22. March 23: Biker's Bargains returned two of the bikes they bought on March 16th because parts were falling off them. The cost of the bikes to Billy Bob was figured out to be $13,224. 23. March 25: Billy Bob paid his employees the $5,304 in salaries owed. 24. March 27: Billy Bob sells 18 bikes to Biker Chick's Chop Shop for $7,995 each with credit terms of 3/10, n/30. The cost of the bikes was determined to be $114,611. 25. March 27: Billy Bob paid FedEx $6,521 to ship the bikes to Biker Chick's Chop Shop. 26. March 28: Biker's Bargains paid their balance off for the bikes they purchased. 27. March 29: Billy Bob paid a utilities bill in the amount of $1,894. 28. March 30: Billy Bob paid off the balance due from Paul's Choppers. B. Bob's Adjustments On March 31, you notice the following: a) You need to recognize depreciation on the building b) You have accrued salaries of $2,769 c) You have $525 worth of supplies on hand d) You need to recognize interest accumulated on the 2 bank loans e) You have used up one months worth of insurance f) You need to recognize depreciation on the bike making machine g) You need to recognize/accrue federal income taxes of 32%. Round to the nearest dollar if needed. Hint: compute adjusted income based on all preceding information, and then determine and record income tax expense. The Accounting Cycle 1. Analyze business transactions 2. Journalize the transactions 3. Post to ledger accounts 4. Prepare a trial balance 5. Journalize and post adjusting entries 6. Prepare an adjusted trial balance 7. Prepare the financial statements (I/S, Stmt of RE, B/S) 8. Journalize and post closing entries 9. Prepare a post-closing trial balance ellers Hale Hore fun Than People Do Create a T-Account for all accounts listed below. Don't forget to put them in color!!! Billy Bob's Bikes Corporation Chart of Accounts Ledger # February 28th Balance 176, 156 1,265 101 102 103 104 105 106 107 108 109 110 Account ASSETS Cash Accounts Receivable Inventory Supplies Prepaid Insurance Land Building Accum Depr. - Building Bike Machine Accum Depr.- Bike Machine $ $ $ $ $ $ $ $ 100,250 $ $ 201 202 203 204 205 LIABILITIES Notes Payable Accounts Payable Interest Payable Salaries Payable Income Tax Payable $ $ 301 302 303 OWNER'S EQUITY Common Stock Retained Earnings Dividends $ $ $ 266,560 11,111 401 402 403 REVENUES Sales Sales Returns & Allowances Sales Discounts $ $ $ 501 502 503 504 505 506 507 508 509 510 EXPENSES Cost of Goods Sold Depr. Exp. - Bike Machine Depr. Exp. - Building Freight-Out Income Tax Expense Insurance Expense Interest Expense Salaries Expense Supplies Expense Utilities Expense $ $ $ $ $ $ $ $ $ $ Billy Bob's Bikes Transactions 1. March 1: Billy Bob purchased a building for $573,696 using $33,696 cash and then borrowing the rest from the bank. The loan from the bank will be paid off over the next 15 years (1/15 of the principal will be paid off at the end of each year). The loan carries an interest rate of 7.72%. Interest accrued will be paid off at the end of every year. The building has an expected life of 24 years and will be depreciated using the straight-line method. 2. March 1: Billy Bob paid in advance for a 10-month insurance policy, which will begin today. He paid $6,660 cash for the policy. 3. March 2: Billy Bob purchased 14 bikes from Paul's Choppers. Each bike cost $6,300 and the credit terms are 3/10, n/30. (Note: Bikes are considered Inventory) 4. March 2: Paul's Choppers paid FedEx $5,083 cash to ship the bikes to Billy Bob. 5. March 3: Billy Bob hires Biker Betty for promotional purposes. He estimates her salary to be $12/hour. She will probably work 10 hours this month. 6. March 5: Billy Bob sold 8 bikes to Bikes R' Us for $7,850 each with credit terms of 2/10, n/30. The total cost of the bikes was figured out to be $50,400. 7. March 6: Billy Bob paid UPS $4,516 cash to ship the bikes to Bikes R' Us. 8. March 8: Stockholder's invest $175,075 into the company in exchange for Billy Bob's Bikes common stock 9. March 10: Billy Bob paid off the balance due from Paul's Choppers. 10. March 12: Billy Bob purchased 16 more bikes from Paul's Choppers. Each bike cost $6,225 and the credit terms are 1/20, n/60. 11. March 12: Billy Bob paid UPS $7,177 cash to ship the bikes he bought from Paul's Choppers. 12. March 14: Bikes R' Us paid their balance off for the bikes they purchased. 13. March 15: Billy Bob bought a Bike Making Machine for $407,100 using $47,100 cash and then borrowing the rest from the bank. The loan will be paid off over the next 3 years (1/3 of the principal will be paid at the end of each year). The loan carries an interest rate of 8.68 percent. Interest accrued will be paid off at the end of every year. The Bike Making Machine has an expected life of 11.5 years and will be depreciated using straight-line method. 14. March 16: Billy Bob sold 9 bikes to Biker's Bargains for $7,900 each with credit terms of 2/10 EOM, n/45. The cost of the bikes was determined to be $59,509. 15. March 16: Biker's Bargains paid FedEx $4,283 to have the bikes shipped to them. 16. March 18: Billy Bob purchased $3,099 worth of supplies from Olga's Office Supplies paying cash. 17. March 19: Billy Bob's pay period ends and he now owes his employees $5,304 in salaries. These salaries will be paid on March 25th. 18. March 20: Billy Bob returned 4 of the bikes he bought from Paul's Choppers. They credited $24,900 to his account. 19. March 21: Billy Bob's Bikes paid cash dividends of $5,555. 20. March 22: Billy Bob purchased 12 bikes from Carly's Cars. Each bike cost $5,999 and the credit terms are 2/10 EOM, n/90. 21. March 22: Billy Bob paid UPS $6,782 to have the bikes shipped to him. 22. March 23: Biker's Bargains returned two of the bikes they bought on March 16th because parts were falling off them. The cost of the bikes to Billy Bob was figured out to be $13,224. 23. March 25: Billy Bob paid his employees the $5,304 in salaries owed. 24. March 27: Billy Bob sells 18 bikes to Biker Chick's Chop Shop for $7,995 each with credit terms of 3/10, n/30. The cost of the bikes was determined to be $114,611. 25. March 27: Billy Bob paid FedEx $6,521 to ship the bikes to Biker Chick's Chop Shop. 26. March 28: Biker's Bargains paid their balance off for the bikes they purchased. 27. March 29: Billy Bob paid a utilities bill in the amount of $1,894. 28. March 30: Billy Bob paid off the balance due from Paul's Choppers. B. Bob's Adjustments On March 31, you notice the following: a) You need to recognize depreciation on the building b) You have accrued salaries of $2,769 c) You have $525 worth of supplies on hand d) You need to recognize interest accumulated on the 2 bank loans e) You have used up one months worth of insurance f) You need to recognize depreciation on the bike making machine g) You need to recognize/accrue federal income taxes of 32%. Round to the nearest dollar if needed. Hint: compute adjusted income based on all preceding information, and then determine and record income tax expense. The Accounting Cycle 1. Analyze business transactions 2. Journalize the transactions 3. Post to ledger accounts 4. Prepare a trial balance 5. Journalize and post adjusting entries 6. Prepare an adjusted trial balance 7. Prepare the financial statements (I/S, Stmt of RE, B/S) 8. Journalize and post closing entries 9. Prepare a post-closing trial balance ellers Hale Hore fun Than People Do