Based on the transactions below of Terry Company please complete the following t

Question

Based on the transactions below of Terry Company please complete the following tasks:

1. Prepare T Accounts for Each Transaction  

2. Prepare Journal Entries for Each Transaction

3. Prepare the Trial Balance as a result of the transactions

4. Prepare the income statement

5. Prepare the statement of Retained Earnings (Beg RE is $0)

6. Prepare the Balance Sheet

Transactions:

Oct. 1 Terry purchased computer equipment for $8,400, paying $1,000 now, and issuing a promissory note for the balance; the note is due in monthly installments of $500 plus interest at 10% on the unpaid balance.

Oct 8 Terry records service revenue earned: $3,200 from cash customers; $12,000 for customers billed for completed services.

Oct 22 Common stock is issued for land with a fair value of $35,000.

October 31 An invoice for $1,200 is received from the company's advertising agency for ads that were run on radio and TV during October; the invoice is due in 30 days.

Explanation / Answer

1. T accounts are provided below:

Transaction 1:

Transaction 2:

Transcation 3:

Transaction 4:

2. Journal entries:

Explanation: amount unpaid at the end of October for Notes payable = 7400-500 = 6900. Interest due = 10% of 6900 = 690

3. Trial balance:

4. Income statement:

5. Statement of retained earnings:

6. Balance sheet:

Computer equipment Debit Credit 1-Oct Cash 1,000.00 1-Oct Notes payable 7,400.00 Cash Debit Credit 1-Oct Computer equipment 1,000.00 Notes payable Debit Credit 1-Oct Computer equipment 7,400.00

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