COMP3-1 (Algo) Recording Journal Entries, Posting Effects to T-Accounts, Preparing Unadjusted Financial Statements, and Performing Ratio Analysis LO1-1, 2-4,2-5, 3-4, 3-5, 3-6 (GL) In April 2019, Sarah Jones created a new business, IthacaDeep, Inc., offering therapeutic deep massage for stress reduction, pain management, injury recovery, and relief from muscle strains and tightness experienced by anyone, especially athletes, fitness enthusiasts, runners, and physical laborers. You have been hired to record the transactions occurring in the first month of operations. a. Received investment of cash by three organizers and issued to them a total of 480 shares of $0.05 par value stock with a market price of $40 per share. b. Borrowed $27,000 from a local bank, signing a note due in three years. c. Signed a one-year lease for a space near a health club, paying $1,300 for April rent and $3,900 for rent for May, June, and July. d. Purchased equipment costing $15,900, paying 20 percent in cash and owing the rest on account to the supplier, due in 60 days. e. Ordered a business computer and printer from Dell for $3,600. f. Loaned $1,700 to an employee who signed a note due in three months. g. Purchased supplies for $3,300 on account. h. Paid Facebook $2,700 as a budget for advertising. (Facebook charges the advertiser's account per click, drawing down the balance. The average click is $0.56.) i. Paid $4,080 for 12 months of insurance coverage, with one-twelfth covering April and the rest covering the remainder of the fiscal year (end of March next year). j. Purchased short-term investments for $15,600 cash. k. Along with her four other licensed massage therapists, Sarah and her team provided $44,800 of deep tissue service to clients in April who paid half in cash and agreed to pay the rest in May. 1. Paid employees $20,800 in wages for work in April. m. At the end of April, received a $450 utility bill for the use of gas and electric in April. The bill will be paid in May. n. Paid $2,900 on the long-term note owed to the bank (ignore interest). o. Earned and received $39 in interest on the short-term investments. p. Sent the team to Boston in April to receive additional specialty training, costing IthacaDeep $2,800 cash. q. Received $2,100 from clients for a series of services to be performed beginning in May. No Date General Journal Debit Credit 1 April 30, 2019 Cash 19,200 Common stock Additional paid-in-capital 24 19,176 2 April 30, 2019 Cash 27,000 Notes payable (current) 27,000 3 1,300 April 30, 2019 Rent expense Prepaid expenses Cash 3,900 5,200 4 15,900 April 30, 2019 Equipment Cash Accounts payable 3,180 12,720 | 5 3,600 April 30, 2019 Equipment Cash 3,600 6 April 30, 2019 Short-term note receivable 1,700 Cash 1,700 7 3,300 April 30, 2019 Supplies Accounts payable 3,300 8 2,700 April 30, 2019 Advertising expense Cash 2,700 9 9 340 April 30, 2019 Insurance expense Prepaid expenses Cash 3,740 4,080 10 15,600 April 30, 2019 Short-term investments Cash 15,600 11 44,800 April 30, 2019 Service revenue Accounts receivable 22,400 Cash 22,400 12 20,800 April 30, 2019 Wages expense Cash 20,800 13 450 April 30, 2019 Utilities expense Accounts payable 450 14 April 30, 2019 2,900 Notes payable (current) Cash 2,900 15 39 April 30, 2019 Cash Interest revenue 39 16 2,800 April 30, 2019 Training expense Cash 2,800 17 April 30, 2019 Cash 2,100 Unearned revenue 2,100 ITHACADEEP, INC. Unadjusted Income Statement For the Month Ended April 30, 2019 0 Total operating revenues Operating expenses: Total operating expenses Income from operations Other items: o O 0 Income before income taxes o 0 $ 0 Earnings per share ITHACADEEP, INC. Statement of Stockholders' Equity For the Month Ended April 30 Common Stock Additional Paid- in Capital Retained Earnings Total Stockholders' Equity $ 0 Balances, April 1 Issue stock 0 0 Balances, April 30 $ 0 $ 0 $ 0 $ 0 O ITHACADEEP, INC. Balance Sheet April 30 Assets Current assets: Total current assets 0 Total assets 0 Liabilities and Stockholders' Equity Current liabilities: Total current liabilities 0 Total liabilities 0 Stockholders' Equity: Total stockholders' equity 0 Compute the following ratios: (1) current ratio and (2) net profit margin ratio. Numerator Current ratio II II o Denominator Numerator Net profit margin = = 0 Denominator