M2MPP (6)1 Word gs Review View Help Easy Document Creator Tell me what you want

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M2MPP (6)1 Word gs Review View Help Easy Document Creator Tell me what you want to do == ?. O..L?. | 1Normal !No Spac Heading 1 Heading 2 Title Subtitle subtle Em En Paragraph Ace Lawn Care Module 2 Mini Practice Problenm Jim has asked you to prepare financial statements for his first month of operation. 1 information relates to the month of May. 2014. (Round all calculations to the nearest whole dollar) he following I. On May 2, Jim signed a l year, 6% note for $3.00 associated with the pre hase ot used truck for the business. The interest will be due with the principle of the note. 2. On May 2, Jim purchased a used truck for $7.000 to use for the lawn care business. He 3. On May 5. Jim purchased a lawn mower for $300 and an aerator for $500. He estimates estimates a trade-in value of $500 at the end of the estimated five-year life of the truck $0 salvage value for both pieces of equipment and an estimated two-year life for both. 4. On May 6. Jim writes a $600 check for a six rmonth insurance policy that expires October 31, 2014 Instructions 1. Using the chart of accounts provided, and the Excel template provided with this assignment, record the adjustments in the Worksheet. calculate the adjusted triol balance and complete the worksheet 2. Prepare the Income Statement, Statement of Owner's Capital and Balance Sheet for Ace Lawn Care for May. 2014 3. Prepare journal entries, in good form. to record the May adjusting entries. Explanations 4. Post the journal entries to general ledger accounts. There are already transactions in the 5. Prepare and post the closing entries for May, 2014. Start with Page 4 of the General 6. Prepare a post-closing trial balance as of May 31.2014, for Ace Lawn Care. are optional. Start with Page 3 of the General Journal for the adjusting entries ledger for the month. you are adding to those traisactions. Journal for the closing entries 8 9 5 6

Explanation / Answer

Journal Entries:

Trial Balance:

Event Account Debit Credit 1 Cash 3500 Note Payable 3500 (Note Payable taken for purchase of used trucks) 2 Equipment 7000 Cash 7000 (purchase of used truck) 3 Equipment 300 Equipment 500 Cash 800 (Purchase of equipment-assuming in cash) 4 Prepaid Insurance 600 Cash 600 (Paid for 6 Month Insurance) Adjusting Entries: a. Interest Expense (3500*6%/12) 17.5 Interest Payable 17.5 (Interest on note payable) b. Depreciation Expense (7000-500)/5=1300 for Year 108 Accumulated Depreciation-Equipment 108 (Truck Dep) c. Depreciation Expense 300/2=150/12 12.5 Depreciation Expense 500/2=250/12 20.8 Accumulated Depreciation-Equipment 12.5 Accumulated Depreciation-Equipment 20.8 (Dep on Lawn mover and Aerator) d. Insurance Expense (600/6) 100 Prepaid Insurance 100 (Insurance for the month amortized)

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