PA3-3 Analyzing the Effects of Transactions Using T-Accounts, Preparing an Unadjusted Trial Balance, and Determining Net Income and Net Profit Margin [LO 3-1, LO 3-2, LO 3-3, LO 3-4, LO 3-5] 001 20 points Spicewood Stables, Inc., was established in Dripping Springs, Texas, on April 1. The company provides stables, care for animals, and grounds for riding and showing horses. You have been hired as the new assistant controller. The following transactions for April are provided for your review. eBook Print References a. Received contributions from investors and issued $200,000 of common stock on April 1. b. Acquired a barn for $142,000. On April 2, the company paid half the amount in cash and signed a three-year note payable for the balance. c. Provided $16,000 in animal care services for customers on April 3, all on credit. d. Rented stables to customers who cared for their own animals; received cash of $13,000 on April 4 for rent earned this month. e. On April 5, received $1,500 cash from a customer to board her horse in May, June, and July (record as Deferred Revenue). f. Purchased and received hay and feed supplies on account on April 6 for $3,000. g. Paid $1,700 on accounts payable on April 7 for previous purchases. h. Received $1,000 from customers on April 8 on accounts receivable. i. On April 9, prepaid a two-year insurance policy for $3,600 for coverage starting in May. i. On April 28, paid $800 in cash for water and utilities used this month. k. Paid $14,000 in wages on April 29 for work done this month. 1. Received an electric utility bill on April 30 for $1,200 for usage in April; the bill will be paid next month. Required: 1. Prepare the journal entry for each of the above transactions. 2. Post the transaction activity from requirement 1 to the T-Accounts below. All accounts begin with zero balances because this is the first month of operations. 3. Prepare an unadjusted trial balance as of April 30. 4-a. Refer to the revenues and expenses shown on the unadjusted trial balance. Based on this information, calculate preliminary net income and net profit margin. 4-b. Determine whether the net profit margin is better or worse than the 30.0 percent earned by a close competitor. Prepare the journal entry for each of the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) View transaction list View journal entry worksheet 20 points No Transaction General Journal Credit Debit 200,000 Cash Common Stock 200,000 eBook 142.000 Print Buildings Notes Payable (long-term) Cash 71,000 71,000 References 3 (C) 16,000 Accounts Receivable Service Revenue 16,000 4 (d) 13,000 Cash Service Revenue 13,000 1,500 Cash Deferred Revenue 1,500 3,000 Supplies Accounts Payable 3,000 7 (9) 1,700 Accounts Payable Cash 700 8 (h) 1,000 Cash Accounts Receivable 1,000 9 0 3,600 Prepaid Insurance Cash 3,600 Utilities Expense 800 Cash 800 11 (k) 14,000 Salaries and Wages Expense Cash 14,000 12 (0) 1.200 Utilities Expense Accounts Payable 1,200 00 Post the transaction activity from requirement 1 to the T-Accounts below. All accounts begin with zero balances because this is the first month of operations. Cash Accounts Receivable 20 points Beg Bal Beg. Bal 200.000 13.000 1.500 1.000 71.000 (6) 1,700 (9) 3.6000 8000 14.000 (k) eBook End. Bal Print End. Bal 124.400 Prepaid Insurance References Supplies 3000 Beg Bali Beg. Bal End. Bal 3.000 End. Bal Buildings Accounts Payable Beg Bal Beg Bal 1,700 3,000 (1) 1.2000 End. Bal 2.500 Deferred Revenue Notes Payable (long-term) 200000 Beg Bal Beg. Bal End. Bal End. Bal 200.000 Common Stock Service Revenue Beg Bal Beg Bal 16.000 ) 13.000 (d) 29.000 End. Bal End. Bal Rent Revenue Utilities Expense Beg Bal Beg Bal Rent Revenue Utilities Expense Beg. Bal Beg. Bal End. Bal End. Bal Salaries and Wages Expense Beg. Bal End. Bal Prepare an unadjusted trial balance as of April 30. SPICEWOOD STABLES, INC. Unadjusted Trial Balance Credit $ Debit 124,400 15,000 3,000 3,600 142.000 Cash Accounts Receivable Supplies Prepaid Insurance Buildings Accounts Payable Deferred Revenue Notes Payable (long-term) Common Stock Service Revenue Rent Revenue Utilities Expense Salaries and Wages Expense Total 2.500 1,500 71,000 200,000 29,000 13,000 2.000 14.000 317,000 s $ 304,000
