Textbook: Financial Accounting/8th Edition/Libby, Libby, & Short

Chapter 3

P3-4 Analyzing the Effects of Transactions Using Accounts, Preparing an Income Statement, and Evaluating the Net Profit Margin Ratio as a Manager LO-4, 3-5, 3-6 Kaylee James, a connoisseur of fine chocolate, opened Kaylee's Sweets in Collegetown on February 1,2014. The shop specializes in a selection o gourmet chocolate candies and a line of gourmet ice cream. You have been hired as manager.Your duties include maintaining the store's financial records. The following transactions occurred in February 2014, the first month of operations. Received four shareholders' contributions totaling S30.200 cash to form the corporation; issued 400 shares of S.10 par value common stock. Paid three months' rent for the store at SI 750 per month (recorded as prepaid expenses) Purchased and received candy for S6.000 on account, due in 60 days. Purchased supplies for SI 560 cash. Negotiated and signed a two-year S11.000 loan at the bank. Used the money from (e) to purchase acomputer for S2,750 (for recordkeeping and inventory tracking); used the balance for furniture and fixtures for the store. Placed a grand opening advertisement in the local paper for S400 cash: the ad ran in the current month. Made sales on Valentine's Day totaling S3,500; S2,675 was in cash and the rest on accounts receivable. The cost of the candy sold was SI 600. Made a S550 payment on accounts payable. Incurred and paid employee wages of S1,300. Collected accounts receivable of $600 from customers. Made a repair to one of the display cases for S400 cash. Made cash sales ofSI.200 during the rest of the month. The cost of the candy sold wasS600. Required 1 & 2. Record in the T-accounts the effects ofeach transaction for Kaylee's Sweets in February. referencing each transaction in the accounts with the transaction letter. Show the ending balances in the T-accounts. An example amount has been posted to the Cash T-Account from transaction (I. Cash Accounts Receivable Beg, bal 400