P3-4 Analyzing the Effects of Transactions Using T-Accounts, Preparing an Income Stat 5, 3-6 Evaluating the Net Profit Margin Ratio as a Manager (AP3-4) me Statement, and come Staten Kaylee James, a connoisseur of fine chocolate, opened Kaylee's Sweets in Collegetown 2014. The shop specializes in a selection of gourmet chocolate candies and a line of You have been hired as manager. Your duties include maintaining the store's financial lowing transactions occurred in February 2014, the first month of operations a. Received four shareholders' contributions totaling $30,200 cash to form the co n on February town on Fe line of gourmet ice crean records S. The cash to form the corporation; issued u shares of $.10 par value common stock. h. Paid three months' rent for the store at $1,750 per month (recorded as prepaid expenses) Purchased and received candy for $6,000 on account, due in 60 day d. Purchased supplies for $1,560 cash e. Negotiated and signed a two-year $11,000 loan at the bank, receiving cash at the time f. Used the money from (e) to purchase a computer for $2,750 (for recordkeeping and inventory traci ing): used the balance for furniture and fixtures for the store g. Placed a grand opening advertisement in the local paper for $400 cash; the ad ran in the cuen month h and the rest on accounts recei h. Made sales on Valentine's Day totaling $3,500; $2,675 was in cas able. The cost of the candy sold was $1,600 i. Made a $550 payment on accounts payable. j. Incurred and paid employee wages of $1,300 k. Collected accounts receivable of $600 from customers. I. Made a repair to one of the display cases for $400 cash. m. Made cash sales of $1,200 during the rest of the month. The cost of the candy sold was $600. Required 1. Set up appropriate T-accounts for Cash, Accounts Receivable, Supplies, Inventory, Prepaid Expenses Equipment, Furniture and Fixtures, Accounts Payable, Notes Payable, Common Stock, Additionl Paid-in Capital, Sales Revenue, Cost of Goods Sold (expense), Advertising Expense, Wage Expense and Repair Expense. All accounts begin with zero balances. 2. Record in the T-accounts the effects of each transaction for Kaylee's Sweets in ing each transaction in the accounts with the transaction letter. Show the ending balances in T-accounts. Note that transactions (h) and (m) require two types of entries, one for revenu tion and one for the expense February, re referen the e for revenue 3. Prepare an income statement at the end of the month ended February 28, 2014. 4. Write a short memo to Kaylee offering your opinion on the results of operations durning month of business uring the first
