Part A — Requirement s 1, 2 and 3
During its first month of operation, the Rawls Repair Corporation, which specializes in bicycle repairs, completed the following transactions:
Oct. 1 Began business by making a deposit in a company bank account of $12,000, in exchange for 1,200 shares of $10 par value 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. Paid $600 down and the balance was placed on account. Payments will be $200.00 per month for nineteen months. The first payment is due 11/1. Note: Use Accounts Payable for the Balance Due.
Oct. 8 Purchased repair supplies from McKenna Company on credit, $390.
Oct. 12 Paid utility bill for October, $154.
Oct. 16 Cash bicycle repair revenue for the first half of October, $1,362.
Oct. 19 Made payment to McKenna Company, $200.
Oct. 31 Cash bicycle repair revenue for the last half of October, $1,310.
Oct. 31 Declared and paid cash dividend of $800.
Requirement 1 – Prepare the Journal Entries in the General Journal – Journal Entries
Requirement 2 – Post Journal Entries to the General Ledger – General Ledger
Requirement 3 – Prepare a Trial Balance – Trial Balance
Part B — Requirements 4 – 10
Prepare adjusting entries using the following information in the General Journal below. Show your calculations!
a) One month’s insurance has expired.
b) The remaining inventory of repair supplies is $194.
c) The estimated depreciation on repair equipment is $70.
d) The estimated income taxes are $40.
Requirement 4 – Prepare the Adjusting Entries – Adjusting Entries
Requirement 5 – Post Adjusting Entries to the General Ledger — General Ledger
Requirement 6 – Prepare an Adjusted Trial Balance – Adjusted TB
Requirement 7 – Prepare the Financial Statements – Financial Statements
Requirement 8 – Prepare the Closing Entries – Closing Entries
Requirement 9 – Post Closing Entries to the General Ledger – General Ledger
Requirement 10 – Prepare the Post Closing Trial Balance – Post Closing TB
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