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Part 1. Happy Trails Bike Company began operations in May 2015 and had the following transactions.

May 1 Issued common stock and received cash of $100,000.

2 Paid $24,000 cash for six months? rent on department store space.

2 Borrowed $20,000 cash from the bank and signed a note payable agreeing to repay it in one year plus 6% interest.

3 Purchased a vehicle and other equipment for $35,600 in cash.

4 Purchased $200,000 of bicycle inventory on credit.

5 Paid $400 for advertisements to run in the area newspaper during June.

6 Paid $16,000 in cash for supplies to do bike repairs.

15 Sold bicycles for cash of $338,000. The cost of the bikes sold was $120,000.

18 Paid for bikes purchased on credit (on May 4).

20 Received $10,000 in advance from a customer for bikes to be built and delivered.

21 Sold bicycles on account to a customer for $63,600. The cost of the bikes sold was $32,000.

25 Collected $40,000 from accounts receivable.

29 Paid general and administrative expenses of $6,000 for the month.

30 Paid cash dividends of $1,000.

Balance Sheet

Income Statement

Trans-action

Cash

+

Noncash Assets

=

Liabilities

+

Cont. capital

+

Retained Earnings

Revenues

?

Expenses

=

Net Income

ACIS 5604 Quiz 1 - Fall 2015 General Instructions: This quiz consists of the 4 parts below. All the parts relate to Happy Trails Bike Company. You may complete the quiz in an Excel file if you wish. You may use your notes and textbook to complete the quiz; however, it should be completed individually. When you are finished, submit your files through Assignments on Scholar. Make sure your name is included in the name of the file. Part 1. Happy Trails Bike Company began operations in May 2015 and had the following transactions. May 1 Issued common stock and received cash of $100,000. 2 Paid $24,000 cash for six months' rent on department store space. 2 Borrowed $20,000 cash from the bank and signed a note payable agreeing to repay it in one year plus 6% interest. 3 Purchased a vehicle and other equipment for $35,600 in cash. 4 Purchased $200,000 of bicycle inventory on credit. 5 Paid $400 for advertisements to run in the area newspaper during June. 6 Paid $16,000 in cash for supplies to do bike repairs. 15 Sold bicycles for cash of $338,000. The cost of the bikes sold was $120,000. 18 Paid for bikes purchased on credit (on May 4). 20 Received $10,000 in advance from a customer for bikes to be built and delivered. 21 Sold bicycles on account to a customer for $63,600. The cost of the bikes sold was $32,000. 25 Collected $40,000 from accounts receivable. 29 Paid general and administrative expenses of $6,000 for the month. 30 Paid cash dividends of $1,000. Required: Record each transaction above in the financial statements effects template, below. Balance Sheet Income Statement Transaction Cash + Noncash Assets = Liabilities + Cont. capital + Retained Earnings Revenues - Expenses = Net Incom e 1 Part 2. At the end of May, the following information is available related to Happy Trails Bike Company: i. ii. iii. iv. v. vi. At the end of May, $12,800 of supplies remained on hand. Salaries of $2,000 were earned by employees during May. Salaries have not been paid or recorded. The vehicle and other equipment have an estimated useful life of 10 years (120 months) and an estimated salvage value of $2,000. Straight-line depreciation is used. The cost of utilities for May was $900. This cost has not been paid or recorded. Built and delivered 25% of the bikes from the transaction on May 20. The cost of the bikes delivered was $1,300. The tax rate is 35%. Required: Record any accounting adjustments required in the financial statement effects template that follows. Note: You may not need all the rows in the template below. Balance Sheet Income Statement Transaction Cash + Noncash Assets = Liabilities + Cont. capital + Retained Earnings Revenues - Expenses = Net Incom e 2 Part 3. Required: Use the above information to prepare an income statement and balance sheet for Happy Trails Bike Company for the month ended May 31, 2015. Use proper form. Part 4. Required: Calculate cash flows from operating, investing and financing activities for Happy Trails Bike Company. You must show your work to receive full credit; however, you do not need to prepare a formal statement of cash flows. 3