Four brothers organized BB entertainment enterprise on October 1, 2020. The following transactions occurred during the first month of operations:

October 1: Received contribution of 11,000 KM from each of the four principal owners of the new business in exchange for shares of stock.

October 2: Purchased the Arena Theater for 125,000 KM. The seller agreed to accept a down payment of 12,500 KM and a seven-year promissory note for the balance. The Arena property consists of land valued at 35,000 KM and a building valued at 90,000 KM.

October 3: Purchased new seats for the theater at a cost of 5,000 KM, paying 2,500 KM down and agreeing to pay the remainder in 60 days.

October 12: Purchased candy, popcorn, cups, and napkins for 3,700 KM on an open account. The company has 30 days to pay for the concession supplies.

October 13: Sold tickets for the opening-night movie for cash of 1,900 KM and took in 2,400 KM at the concession stand.

October 17: Rented out the theater to a local community group for 1,500 KM. The community group is to pay one-half of the bill within five working days and has 30 days to pay the remainder.

October 23: Received 60% of the amount billed to the community group.

October 24: Sold movie-tickets for cash of 2,000 KM, and took in 2,800 KM at the concession stand.

October 26: The four brothers, acting on behalf of Beverly Entertainment paid a dividend of 750 KM on shares of stock owned by each of them, or 3,000 KM in total.

October 27: Paid 500 KM for utilities.

October 30: Paid wages and salaries of 2,400 KM total to the ushers, the projectionist, concession stand workers, and maintenance crew.

October 31: Sold movie tickets for cash of 1,800 KM, and took in 2,500 KM at the concession stand.

Required:

1. Prepare journal entries for the above transactions on the paper. Do not forget to make an adjustment necessary for the interest expense on the seven year promissory note. (Note: seven -year promissory note has 5% interest rate and you should use simple interest method to account for one month's worth of interest expense at October 31, 2020.) Also, please note that the monthly depreciation expense relating to the building amounts to 750 KM. (26 points)

2. Post the journal entries to T accounts on the blank paper (you will upload these workings later on into LMS). (14 points)

3. Close the temporary accounts into the Income Summary and write the journal entries related to closing of the accounts into the income summary. (20 points)

4. Prepare an income statement for the month ended October 31, 2020. (Prepare the statement on paper but key in the net income figure into the LMS in the space provided below.) (10 points)

5. Prepare a statement of retained earnings for the month ended October 31, 2020. (Prepare the statement on paper buy key in the ending balance of the statement of retained earning into the LMS in the space provided below.) (10 points)

6. Prepare a classified balance sheet as at October 31, 2020. (Prepare the statement on the paper but key in the total for assets, total for liabilities and total for owner's equity into the LMS in the space provided below.) (20 points)