Bill?s Lawn Care Module 2 Mini Practice Problem

Bill has asked you to prepare financial statements for his first month of operation. The following information relates to the month of May, 2014. (Round all calculations to the nearest whole dollar)

On May 2, Bill signed a 1 year, 6% note for $3,500 associated with the purchase of a used truck for the business. The interest will be due with the principle of the note.On May 2, Bill purchased a used truck for $7,000 to use for the lawn care business. He estimates a trade-in value of $500 at the end of the estimated five-year life of the truck. On May 5, Bill purchased a lawn mower for $300 and an aerator for $500. He estimates $0 salvage value for both pieces of equipment and an estimated two-year life for both.On May 6, Bill writes a $600 check for a six month insurance policy that expires October 31, 2014.

Instructions:

• Using the chart of accounts provided, and the Excel template provided with this assignment,record the adjustments in the Worksheet, calculate the adjusted trial balance and complete the worksheet.
• Prepare the Income Statement, Statement of Owner?s Capital and Balance Sheet for Bill?s Lawn Care for May, 2014
• Prepare journal entries, in good form, to record the May adjusting entries. Explanations are optional. Start with Page 3 of the General Journal for the adjusting entries.
• Post the journal entries to general ledger accounts. There are already transactions in the ledger for the month, you are adding to those transactions.
• Prepare and post the closing entries for May, 2014. Start with Page 4 of the General Journal for the closing entries
• Prepare a post-closing trial balance as of May 31, 2014, for Bill?s Lawn Care.

Bill's Lawn Care Module 2 Mini Practice Problem Bill has asked you to prepare financial statements for his first month of operation. The following information relates to the month of May, 2014. (Round all calculations to the nearest whole dollar) 1. On May 2, Bill signed a 1 year, 6% note for $3,500 associated with the purchase of a used truck for the business. The interest will be due with the principle of the note. 2. On May 2, Bill purchased a used truck for $7,000 to use for the lawn care business. He estimates a trade-in value of $500 at the end of the estimated five-year life of the truck. 3. On May 5, Bill purchased a lawn mower for $300 and an aerator for $500. He estimates $0 salvage value for both pieces of equipment and an estimated two-year life for both. 4. On May 6, Bill writes a $600 check for a six month insurance policy that expires October 31, 2014. Instructions: 1. Using the chart of accounts provided, and the Excel template provided with this assignment,record the adjustments in the Worksheet, calculate the adjusted trial balance and complete the worksheet. 2. Prepare the Income Statement, Statement of Owner's Capital and Balance Sheet for Bill's Lawn Care for May, 2014 3. Prepare journal entries, in good form, to record the May adjusting entries. Explanations are optional. Start with Page 3 of the General Journal for the adjusting entries. 4. Post the journal entries to general ledger accounts. There are already transactions in the ledger for the month, you are adding to those transactions. 5. Prepare and post the closing entries for May, 2014. Start with Page 4 of the General Journal for the closing entries 6. Prepare a post-closing trial balance as of May 31, 2014, for Bill's Lawn Care. Classification ASSETS LIABILITIES OWNER'S EQUITY REVENUES EXPENSES Bill's Lawn Care Chart of Accounts Account Number Account Name 101 Cash 110 Accounts Receivable 120 Supplies 130 Prepaid Insurance 150 Equipment 155 Accumulated Depreciation - Equipment 201 Accounts Payable 220 Notes Payable 225 Interest Payable 301 Owner's Capital 305 310 401 620 630 640 650 660 670 680 Owner's Drawings Income Summary Lawn Service Revenue Supplies Expense Fuel Expense Repair and Maintenance Expense Advertising Expense Insurance Expense Depreciation Expense Interest Expense WORKSHEET Account Name Totals Net Income Totals Trial Balance Debit Credit Adjustments Debit Credit Adjusted Trial Balance Debit Credit Income Statement Debit Credit Balance Sheet Debit Credit INCOME STATEMENT OWNER'S EQUITY STATEMENT BALANCE SHEET GENERAL LEDGER ACCOUNT Cash DATE ACCOUNT NO. DESCRIPTION 2014 MAY 1 2 3 6 8 16 23 26 30 31 31 31 ACCOUNT J1 J1 J1 J1 J1 J1 J1 J2 J2 J2 J2 J2 DESCRIPTION 2014 MAY 16 23 30 31 DATE ACCOUNT DATE 2014 MAY 6 06/22/2016 DEBIT CREDIT 15,000 2,000 800 600 50 500 700 50 800 500 150 1,000 Accounts Receivable DATE ACCOUNT POST REF. BALANCE Debit 15,000 13,000 12,200 11,600 11,550 12,050 12,750 12,700 13,500 14,000 13,850 12,850 ACCOUNT NO. POST REF. J1 J1 J2 J2 DEBIT CREDIT 100 400 200 500 Supplies BALANCE Debit 100 500 700 200 ACCOUNT NO. DESCRIPTION POST REF. DEBIT CREDIT Prepaid Insurance DESCRIPTION BALANCE Debit ACCOUNT NO. POST REF. J1 DEBIT 600 CREDIT BALANCE Debit 600 ACCOUNT DATE Equipment ACCOUNT NO. DESCRIPTION 2014 MAY 2 3 ACCOUNT DATE ACCOUNT DATE ACCOUNT DATE 2014 MAY 2 06/22/2016 POST REF. J1 J1 DEBIT CREDIT 5,000 800 5,000 5,800 Accumulated Depreciation - Equipment DESCRIPTION ACCOUNT NO. POST REF. DEBIT CREDIT Accounts Payable DESCRIPTION BALANCE Debit ACCOUNT NO. POST REF. DEBIT CREDIT Notes Payable DESCRIPTION BALANCE Debit BALANCE Debit ACCOUNT NO. POST REF. J1 DEBIT CREDIT 3,000 BALANCE Debit ACCOUNT DATE ACCOUNT DATE Interest Payable DESCRIPTION DATE DESCRIPTION DATE ACCOUNT DATE 2014 MAY 16 06/22/2016 DEBIT CREDIT DEBIT CREDIT ACCOUNT NO. POST REF. J2 DEBIT CREDIT 1,000 ACCOUNT NO. POST REF. DEBIT CREDIT Lawn Service Revenue DESCRIPTION BALANCE Debit 1,000 Income Summary DESCRIPTION BALANCE Debit 15,000 Owner's Drawing DESCRIPTION BALANCE Debit ACCOUNT NO. POST REF. J1 2014 MAY 31 ACCOUNT POST REF. Owner's Capital 2014 MAY 1 ACCOUNT ACCOUNT NO. BALANCE Debit ACCOUNT NO. POST REF. J1 DEBIT CREDIT 600 BALANCE Debit 23 30 ACCOUNT DATE ACCOUNT DATE J1 J2 Supplies Expense DESCRIPTION DATE DESCRIPTION DATE 2014 MAY 8 06/22/2016 DEBIT CREDIT DEBIT CREDIT 150 ACCOUNT NO. POST REF. DEBIT J2 CREDIT 50 BALANCE Debit 50 Advertising Expense DESCRIPTION BALANCE Debit 150 Repair and Maintenance Expense DESCRIPTION BALANCE Debit ACCOUNT NO. POST REF. J2 2014 MAY 26 ACCOUNT ACCOUNT NO. POST REF. Fuel Expense 2014 MAY 31 ACCOUNT 1,100 1,000 ACCOUNT NO. POST REF. J1 DEBIT CREDIT 50 BALANCE Debit 50 ACCOUNT DATE ACCOUNT DATE ACCOUNT DATE 06/22/2016 Insurance Expense DESCRIPTION ACCOUNT NO. POST REF. DEBIT CREDIT Depreciation Expense DESCRIPTION ACCOUNT NO. POST REF. DEBIT CREDIT Interest Expense DESCRIPTION BALANCE Debit BALANCE Debit ACCOUNT NO. POST REF. DEBIT CREDIT BALANCE Debit 101 Credit 110 Credit 120 Credit 130 Credit 06/22/2016 150 Credit 155 Credit 201 Credit 220 Credit 3,000 06/22/2016 225 Credit 301 Credit 15,000 305 Credit 310 Credit 401 Credit 600 06/22/2016 1,700 2,700 620 Credit 630 Credit 640 Credit 650 Credit 06/22/2016 660 Credit 670 Credit 680 Credit 06/22/2016 POST CLOSING TRIAL BALANCE Debit 06/22/2016 Credit