During its first month of operation, the Rawls Repair Company, which specializes in bicycle repairs, completed the following transactions:
Oct. 1 Owner, John Rawls, began business by investing $10,000 in exchange for common stock.
Oct. 1 Paid the premium on a one-year insurance policy, $1,200.
Oct. 1 Paid the current month’s rent, $1,040.
Oct. 3 Purchased repair equipment from Conklin Company, $4,400 by signing a 2-year note.
Oct. 8 Purchased repair supplies from McKenna Company on credit, $420.
Oct. 19 Made partial-payment to McKenna Company, $200.
Oct. 20 Paid wages to part-time assistant, $800.
Oct. 31 Cash bicycle repair revenue for October, $3,200.
Oct. 31 The owner (and sole stockholder), John Rawls, was paid a dividend of $600.
Oct. 31 Received a bill for October utilities, $194, to be paid in November.
Prepare journal entries to record the October transactions in the Journal.
Post the October journal entries to the T-Accounts and compute ending balances.
Prepare a trial balance at October 31.
Prepare Oct. 31 adjusting entries in the Journal using the following information.
a) One month’s worth of prepaid insurance has expired.
b) The remaining amount of repair supplies at month-end is $194.
c) The estimated monthly depreciation on repair equipment is $70.
d) Unpaid wages at Oct. 31 are $100.
Post your adjustments to the T-accounts and compute adjusted balances.
(Just add to the October T-accts.)
Prepare an Adjusted Trial Balance.
Prepare the financial statements for Rawls Repair Company as of October 31:
Retained Earnings Statement
Classified Balance Sheet
Prepare the closing entries at October 31 in the Journal.
Post the closing entries to the T-accounts and compute ending balances. (Just add to the adjusted balances already listed.)
Prepare a post-closing trial balance as of October 31.