The following transactions apply to Bob’s Bike Shop for 2016, its first year of
ID: 2425880 • Letter: T
Question
The following transactions apply to Bob’s Bike Shop for 2016, its first year of operations:
Acquired $9,600 of merchandise from Bob Hall, the owner, who had acquired the merchandise prior to opening the shop. Issued common stock to Bob in exchange for the merchandise inventory.
Physically counted inventory, which indicated that $28,500 of inventory was on hand at the end of the accounting period.
Record each of these transactions in general journal form using the periodic method.
b. Post each of the events to ledger T-accounts.
Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2016.
Prepare the necessary closing entries at the end of 2016, and post them to the appropriate T-accounts.
1. Acquired $35,000 cash from the issue of common stock. 2.Acquired $9,600 of merchandise from Bob Hall, the owner, who had acquired the merchandise prior to opening the shop. Issued common stock to Bob in exchange for the merchandise inventory.
3. Purchased $85,000 of inventory on account. 4. Paid $2,800 for radio ads. 5. Sold inventory for $165,000 cash. 6. Paid $28,000 in salary to a part-time salesperson. 7. Paid $65,000 on accounts payable (see Event 3). 8.Physically counted inventory, which indicated that $28,500 of inventory was on hand at the end of the accounting period.
a.Record each of these transactions in general journal form using the periodic method.
b. Post each of the events to ledger T-accounts.
c.Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2016.
d.Prepare the necessary closing entries at the end of 2016, and post them to the appropriate T-accounts.
e. Prepare a post-closing trial balance.Explanation / Answer
1. General Journal:
T accounts of ledger with Income Statement and Balance Sheet:
Liabilities and Equity = Assets Equity Liabilities Revenues and gains = Inventory & Expenses Cash other assets 1 35000 = 35000 2 9600 = 9600 3 85000 = 85000 4 = 2800 -2800 5 165000 = 165000 6 = 28000 -28000 7 -65000 = -65000 44600 20000 165000 = 125400 104200 0Related Questions
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