Your new business, New City Motors, sells motorcycle accessories and makes repairs. New City Motors uses the periodic inventory system for its merchandise inventories and all taxes are ignored. The following transactions occurred in the period of October, 2021:

a. Received $15,000 cash from your parents and issued capital stock to them.

b. Signed and paid a 1-year rental contract in advance for the shop totaled $7,200 in cash.

c. Signed a 1-year loan with a bank to raise additional money totaled at $10,000.

d. Purchased all repair tools, equipment and furniture for $12,000 and paid all in cash.

e. Bought merchandise inventories totaled at $4,000 from suppliers and paid all in cash.

f. Bought repair supplies totaled at $3,000 on account from suppliers.

g. Sold all merchandise inventories for $6,000 on account.

h. Provided repair services for customers totaled at $5,000 and received cash.

i. Paid suppliers $3,000 in cash for repair supplies purchased in (f).

j. Collected $6,000 in cash from customers from transaction (g) above.

k. Paid $1,000 in cash for employee wages expense.

l. Paid $500 in cash for utilities expense.

Required:

1. For each transaction a-l, perform transactions analysis and indicate the account, amount, and effects (+ for increase, for decrease or NE for no effect) on the accounting equation A = L + SE. (12 marks)

2. Prepare journal entries for each transaction into the general journal using the simplified format (no need to write explanations). (24 marks)

3. Prepare an unadjusted trial balance at 31 October 2021. (12 marks) 4. Assume that you are required to prepare and post adjusting journal entries for the following transactions: (no need to write explanations) (10 marks)

m. One months rent has now expired leaving 11 months of prepaid rent left at 31 October 2021.

n. Interest on loan from transaction (c) for October, 2021 was $200 which will be paid in November 2021 at an annual interest rate of 10%.

o. The amount of depreciation expense for repair tools, equipment and furniture is $250 each month.

p. $1,200 of repair supplies has been used in operations leaving $1,800 in the shop at 31 October 2021.

q. The ending merchandise inventories amount at 31 October 2021 was $0.

5. Prepare an adjusted trial balance at 31 October 2021. (12 marks)

6. Prepare an Income Statement for the period of October, 2021. (assume no income tax) (12 marks)

7. Prepare the Balance Sheet at 31 October 2021. (12 marks)

8. Prepare closing journal entries for transactions in October, 2021 but you do not have to summarize or post to the general ledger (no need to write explanations).