Part 2: Assessing Financial statement Effects of Transactions and Adjustments

Use the financial statement effects template below to record the below transaction and adjustments.

1. Freedom Bikers began operations in September 2021. Complete the transactions for the month of September including the necessary adjustments at the end of the month.

1. Owner invested $120,000 cash and a truck worth $36,000 in exchange for stock.
2. Paid $84,000 cash for 6 months rent.
3. Purchased $300,000 of bicycle inventory on credit.
4. Sold bicycles for cash of $507,000. The cost of the bikes sold was $180,000.
5. Sold and invoiced bicycles to a client for $95,400. The cost of the bikes sold was $48,000.
6. Paid $90,000 cash for an advertising campaign in connection with Tour de France at the beginning of September. The campaign will run over the next two of months proportionally.
7. Paid $24,000 in cash for supplies to have on hand for bike repairs.
8. Collected $60,000 from accounts receivable.
9. Paid for bikes purchased on credit in Transaction c above.
10. Paid cash dividends of $3,000.
11. Received $6,000 cash from a customer as a deposit for a custom bicycle to be built.
12. At the end of September, $19,200 supplies remained on hand.
13. Rent paid in Transaction b is for a lease that began on September 1
14. At the end of September, one-half of the advertising campaign in Transaction f was completed.
15. The truck is expected to be used for five years (60 months) and is depreciated monthly.
16. The custom bicycle in Transaction k was built and delivered to the customer on September 30th

Balance Sheet

Income Statement

Transaction

Cash Asset

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Noncash Assets

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Liabil- ities

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Contrib. Capital

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Earned Capital

Rev-enues

Expen-ses

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Net Income

Balance Sheet

Income Statement

Transaction

Cash Asset

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Noncash Assets

=

Liabil- ities

+

Contrib. Capital

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Earned Capital

Rev-enues

Expen-ses

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Net Income