Lars Linken opened Ayayai Cleaners on March 1, 2017. During March, the following
ID: 2436898 • Letter: L
Question
Lars Linken opened Ayayai Cleaners on March 1, 2017. During March, the following transactions were completed.
Mar. 1
1
1
2
3
6
14
18
20
21
28
31
31
The chart of accounts for Ayayai Cleaners contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Prepaid Rent, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Salaries and Wages Payable, Notes Payable, Interest Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Rent Expense, and Interest Expense.
1. Journalize the March transactions.
2. Post to the ledger accounts. (Post entries in the order of journal entries presented in the previous part.)
3. Prepare a trial balance at March 31.
4. Journalize the following adjustments. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
5. Post adjusting entries to the T-accounts.
6. Prepare an adjusted trial balance.
7. Prepare the income statement for March.
8. Prepare a retained earnings statement for March. (List items that increase retained earnings first.)
9. Prepare a classified balance sheet at March 31. (List Current Assets in order of liquidity.)
10. Journalize and post closing entries and complete the closing process. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For accounts that have zero ending balance, the entry should be the balance date and zero for the amount.)
11. Prepare a post-closing trial balance at March 31.
Mar. 1
Issued 7,400 shares of common stock for $11,100 cash.1
Borrowed $4,200 cash by signing a 6-month, 6%, $4,200 note payable. Interest will be paid the first day of each subsequent month.1
Purchased used truck for $5,900 cash.2
Paid $1,200 cash to cover rent from March 1 through May 31.3
Paid $1,800 cash on a 6-month insurance policy effective March 1.6
Purchased cleaning supplies for $1,480 on account.14
Billed customers $2,740 for cleaning services performed.18
Paid $370 on amount owed on cleaning supplies.20
Paid $1,300 cash for employee salaries.21
Collected $1,180 cash from customers billed on March 14.28
Billed customers $3,110 for cleaning services performed.31
Paid $260 for gas and oil used in truck during month (use Maintenance and Repairs Expense).31
Declared and paid a $670 cash dividend.Explanation / Answer
GENERAL JOURNAL DATE ACCOUNT TITLE DEBIT CREDIT MARCH 1 Cash $11,000 Common Stock $11,000 1 Cash $4,200 Notes Payable $4,200 1 Equipment $5,900 Cash $5,900 2 Prepaid Rent $1,200 Cash $1,200 3 Prepaid Insurance $1,800 Cash $1,800 6 Supplies $1,480 Accounts payable $1,480 14 AccountsReceivable $2,740 Service Revenue $2,740 18 Accounts payable $370 Cash $370 20 Salariesand wages expense $1,300 Cash $1,300 21 Cash $1,180 Accounts Receivable $1,180 28 AccountsReceivable $3,110 Service Revenue $3,110 31 Maintenance and Repair expense $260 Cash $260 31 Dividend $670 Cash $670 LEDGER ACCOUNTS CASH Date Description Debit Credit March 1 Common Stock $11,000 1 Notes Payable $4,200 1 Equipment $5,900 2 Prepaid Rent $1,200 3 Prepaid Insurance $1,800 18 Accounts payable $370 20 Salariesand wages expense $1,300 21 Accounts Receivable $1,180 31 Maintenance and Repair expense $260 31 Dividend $670 ACCOUNTS RECEIVABLE Date Description Debit Credit March 14 Service Revenue $2,740 21 Cash $1,180 28 Service Revenue $3,110 PREPAID RENT Date Description Debit Credit March 2 Cash $1,200 PREPAID INSURANCE Date Description Debit Credit March 3 Cash $1,800 SUPPLES Date Description Debit Credit March 6 Accounts Payable $1,480 EQUIPMENT Date Description Debit Credit March 1 Cash $5,900 NOTES PAYABLE Date Description Debit Credit March 1 Cash $4,200 ACCOUNTS PAYABLE Date Description Debit Credit March 6 Supplies $1,480 18 Cash $370 COMMON STOCK Date Description Debit Credit March 1 Cash $11,000 DIVIDEND Date Description Debit Credit March 31 Cash $670 SERVICE REVENUE Date Description Debit Credit March 14 AccountsReceivable $2,740 28 AccountsReceivable $3,110 MAINTANANCE & REPAIR EXPENSE Date Description Debit Credit March 31 Cash $260 SALARIES & WAGES EXPENSE Date Description Debit Credit March 20 Cash $1,300
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