Our company, Paddle Away, began operations on 1-1-12 and the year ended on 12-31-12. We buy kayaks and sell them in a retail store. These were our January 2012 transactions:
1. The owner, Bob Paddle, invested $250,000 cash into the business in exchange for Common Stock
2. Paddle Away borrowed $50,000 from the bank
3. Paddle Away paid $1,000 for rent on the retail store location
3. Paddle Away purchased 1,000 kayaks at $125 each. They paid for ½ of them with cash that day and will pay for the rest of them at a later date.
5. Paddle away sold 400 of those kayaks for $250 each - 100 kayaks were sold for immediate cash receipt and the rest of the cash will be received at a later date.
4. Paddle Away advertised on Television at a cost of $500. This will be paid at a later date.
7. Paddle Away sold 200 more kayaks for $250 each - ½ paid with cash and the rest will be received at a later date.
5. Paddle Away collected cash of $25,000 from the sales transaction in #5 above.
9. Paddle Away paid $10,000 to vendors from the purchase of kayaks in item #4 above.
10. Paddle Away paid $5,000 on its outstanding bank loan.
1. Record the journal entries for the above transactions.
2. Then move those into T-Accounts, calculate your account balances, and make sure total debits = total credits
3. Then use your account balances to create the Balance Sheet, Income Statement, and Statement of Changes in Owners' Equity - in the proper formats.