Question
Prepare all required closing entries (omit explanations) for the end of the accounting period, post all closing entries to the general ledger and prepare a
- Prepare all required closing entries (omit explanations) for the end of the accounting period, post all closing entries to the general ledger and prepare a Post-Closing Trial Balance as of June 30, 2016.
- Calculate the following ratios: Current Ratio, Quick Ratio, Profit Margin, and Return on Assets.
Transactions:
1/1 The owner of the business contributed $10,000 cash and a truck worth $16,000 to the business in exchange for 26,000 shares of $1par common stock. This is the first ever transaction for the business. Use perpetual inventory.
1/31 Borrowed $50,000 on a note payable from the bank.
1/31 Paid January rent, $500
2/01 Purchased equipment for $10,000 cash.
2/15 Purchased 100 bags of lawn fertilizer for $2.00 per bag on account (this lawn fertilizer will be sold to customers to apply themselves)
2/01 Paid February rent, $500
3/01 Prepaid, March December rent at $500 per month
3/01 Purchased 100 bags of weed preventive fertilizer for $8 per bag on account (this fertilizer will be sold to customers to apply themselves)
3/01 Paid amount owed on lawn fertilizer from 2/15 transaction8 25
3/15 Sold 20 bags of weed preventive fertilizer for $15 per bag (cash)
3/15 Received $500 cash from customers for spring lawn services performed
3/15 Performed spring lawn service to customers on account $750
4/01 Collected $500 from customers on account from 3/15 transaction
4/14 Collected $250 from customers on account from 3/15 transaction
4/15 Sold 25 bags of weed preventive fertilizer for $15 per bag (cash)
4/15 Sold 15 bags of lawn fertilizer for $6 per bag (cash)
4/15 Paid for advertising campaign, $5,000 cash
5/01 Received payment for summer services in advance from 20 customers
5 months (May September) at $1000 each for a total of $100,000
5/31 Received payment for Mays lawn services provided from 5 customers, $5,500
5/31 Performed May lawn service for 5 customers on account to be received by 6/15, $5,500
5/31 Paid fuel expense of $1,000 for May
6/05 Paid wages to employees for May, $8000
6/15 Received payment from Mays credit customers, $5,500
6/15 Sold 20 bags of lawn fertilizer for $6 per bag (cash)
6/30 Received payment for Junes lawn service from 4 customers, $4,400
6/30 Performed June lawn service for 5 customers on account to be received by 7/15, $5,500
6/30 Purchased supplies on account, $1,000
6/30 Paid semi-annual payment on note from bank, $4,000 principal plus $2,000 interest expense for a total payment of $6,000
6/30 Paid fuel expense of $1,000 for May
Information for adjusting entries: (06/30/2016)
- Depreciation on the truck for the period, (St-Line method, 4 years useful life, no salvage value)
- Depreciation on the equipment for the period, (St-Line method, 3 years useful life, $1000 salvage value)
- Adjust for unearned revenue now earned from customers who prepaid on 5/01.
- Adjust for prepaid rent expired.
- Accrue wages for employees who worked in June, but will be paid on July 5th, $7,500
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