Transactions On May I, Herb Bryan began an auto repair shop, Bryan\'s Automotive

Question

Transactions On May I, Herb Bryan began an auto repair shop, Bryan's Automotive Service. The following transactions during the month: May 1 Bryan contributed $100,000 cash to the business in exchange for capital Paid $8,000 for the May rent on an empty, two story building which will be automotive services. used to perform 2 Purchased $40,000 of equipment, paying $20,000 in cash and signing a 6 month note payable for the remainder which will be paid in full with interest on November 2. Interest however, will accrue at the end of each month (see adjustments) 2 Paid 53,600 for a 4-month insurance policy starting on May 1. 10 Purchased supplies on account, $12,800 22 Paid $600 for advertising expenses for the current month 27 Made a payment of $4,000 for the supplies purchased on May 10. 28 The business received a bill for $1,450 from the utility company. The bill will be paid in June, 31 Revenues earned during the month were $33,500 which consisted of $8,500 in cash and $25,000 on account 31 Paid employees' wages $3,500. 31 Purchased additional supplies for $4,000 cash a car that will be displayed on the Antiques Roadshow, The work will be done in June Bryan withdrew cash of $2,500 for personal use. 31 End of Month Adjustment Data a) An inventory count shows $6,200 of supplies on hand on May 31 b) Depreciation for the month, $2,000 c) One month of insurance has expired. d) Accrued Interest, $100.

Explanation / Answer

We Journalise as

Date Particulars Debit credit 1-May Cash 100000       Bryan's Capital 100000 cash contributed as capital 2-May Rent Expense 8000          Cash 8000 Rent expense paid 2-May Equipment 40000        Cash 20000        Short term Note Payable 20000 Equipemt purchased 2-May Prepaid Insurance 3600        Cash 3600 Insurance paid for 4 months 10-May Supplies 12800         Accounts Payable 12800 Supplies purchased 22-May Advertisement expense 600       Cash 600 Advertisement expense incurred 27-May Accounts payable 4000      Cash 4000 Amount paid on account of supplies purchased 28-May Utility Expense 1450         Accounts Payable 1450 Utility Expense recorded , to be paid in june 31-May Cash 8500 Accounts Receivables 25000         Revenue earned 33500 Revenue earned during the month 31-May Wage Expense 3500            Cash 3500 Paid wage expense 31-May Supplies 4000         Cash 4000 Supplies purchased on cash 31-May Cash 5000            un earned revenue 5000 Unearned revenue receipt 31-May Bryan's capital 2500          Cash 2500 Amount withdrawn by Bryan 31-May Supplies Expense 10600        Supplies 10600 Supplies purchased = 12800+4000 16800 Supplies in hand = 6200 Supplies expensed = 16800-6200 , =10600 31-May Depreciation expense 2000           Accumulated depreciation 2000 Depreciation expense recorded 31-May Insurance expense 900          Prepaid Insurance 900 Proportionate amount of Insurance for 1 month = 3600 / 4 , =900 31-May Interest expense 100         Accrued Interest 100 Interest accrued on short term notes payable

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