Problem 3-13A Journal Entries and a Balance Sheet

Krittersbegone Inc. was organized on July 1 by a group of technicians to provide termite inspec- tions and treatment to homeowners and small businesses. The following transactions occurred during the first month of business:

February 15: February 26: February 27:

February 28: February 28: February 28:

Required

Received $8,000 cash from customer accounts. Provided $16,800 of services on account during the month.

Received a $3,400 bill from the local service station for gas and oil used during February. Paid $400 for wages earned by employees for the month. Paid $3,230 for February advertising.

Declared and paid $2,000 cash dividends to stockholders.

July 2:

July 3: July 5:

July 17: July 28:

July 30: July 30:

Required

Prepare journal entries on the books of Krittersbegone to record the transactions entered into during the month. Ignore depreciation expense.

Prepare a classified balance sheet dated July 31. From the balance sheet, what cash inflow and what cash outflow can you predict in the month of August? Who would be interested in the cash flow information? Why?