Jan Wei owns a cycle store that sells equipment, clothing, and other accessories
ID: 2610261 • Letter: J
Question
Jan Wei owns a cycle store that sells equipment, clothing, and other accessories. During the month of June, the following activities occurred:
1.The business earned $30,000 from the sale of bicycles, clothing, and accessories. Half the sales were for cash and the other half was on account.
2.The merchandise that was sold originally cost $17,400.
3.Jan purchased additional merchandise on credit for $20,800.
4.Jan paid $18,000 to the suppliers of the merchandise purchased above.
5.The telephone, electricity, and water bills for the month came to $430. All but one of these bills, for $130, was paid by the end of the month.
6.Additional expenses for the month, including depreciation expense of $600, totalled $2,100. They were all paid in cash, except the depreciation expense, and were for repairs and maintenance done to the store.
7.At the end of May, Jan had an 8% loan for $5,000 outstanding with the bank. On the last day of June, Jan paid the monthly interest that was owed on the loan, and also paid $500 on the loan principal.
8.On the last day of June, a customer ordered a $1,300 bicycle. Jan did not have it in stock, so it was ordered and will be delivered in July. Since it was a special order, the customer paid a $300 deposit on it.
Required
Referring to the concepts discussed so far in this textbook:
a.
Prepare journal entries for each transaction or adjustment
b.
Calculate the net income for the month.
Explanation / Answer
b.
Date Accont title and explanation Debit Credit 1 Cash $ 15,000 Accounts receivable $ 15,000 Sales revenue $ 30,000 2 Cost of goods sold $ 17,400 Inventory $ 17,400 3 Inventory $ 20,800 Accounts payable $ 20,800 4 Accounts payable $ 18,000 Cash $ 18,000 5 Utilities expense $ 430 Cash $ 300 Utilities payable $ 130 6 Repairs and maintenance expense $ 1,500 Cash $ 1,500 Depeciation expense $ 600 Accumulated depreciation $ 600 7 Interest expense(5000 x 8%*1/12) $ 33 loan $ 500 Cash $ 533 8 Unearned sales revenue $ 300 Cash $ 300Related Questions
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