Problem:
Sally Brown has decided to go to business for herself by running the company Tapes 4 You. Tape 4 You will rent tapes, DVDs, VCRs, and DVD players. In addition, it will also rent video games and the necessary machinery. Finally, a small amount of inventory will be kept on hand of VCRs and DVD players for sale. The following transactions have occurred.
June 1 Sally contributes $20,000 cash and $500 in office equipment to the company.
June 1 Sally signs a 12 month lease for $6,000.
June 3 Sally purchases a new computer for the business for $5,500. It has a usable life of 5 years and will be depreciated under straight-line rules.
June 3 Sally purchases a return bin for outside the store. It cost $2,000, has a usable life of 10 years and will be depreciated under the double-declining balance rules.
June 4 Sally purchases 3 VCRs for the resale at $50 each and 5 DVD players for resale at $75 each. She plans on the FIFO method of inventory.
June 4 Customer rentals equal 75 rentals at $5 each. 90% of rentals are in cash. The remainder are credit.
June 5 Sally purchases 5 VCRs for resale at $45 each and 1 more DVD player for resale at $60.
June 5 Joan Brooks comes into the store and pays Sally upfront for 10 rentals ( at $5 a piece) but only takes 1 video home with her. She will be entitled to rent the other 9 movies at a future date.
June 6 Tina Johnson owns a daycare and needs to buy 4 VCRs and 2 DVD players. She pays $200 for each VCR and $275 for each DVD player. She pays on credit.
June 7 Customer rentals for the day equal 25 rentals at $5 each. All rentals were paid for in cash. The remainder are on credit.
June 10 Sally hires help. She will pay the new employee $20 per day for working 3 hours.
June 16 Joan Brooks rents 3 videos. Additional rentals for the day equal 150 at $5 each 50% were paid in cash.
June 17 Tina Johnson pays $300 of her amount owed to Tapes 4 You.
June 20 Sally purchases $500 of office supplies.
June 25 Customer rentals for the day equal 100 rentals at $5 each. 70% of sales were cash sales. The remainder are credit.
June 30 It is decided that an allowance for doubtful accounts needs to be set up. A percentage of credit sales method is to be used. It is deemed that 2% of all credit sales will be uncollectible.
Please help Sally by completing all necessary journal entries, adjusting entries, and closing entries. In addition, please prepare all t-accounts. You will need to prepare an unadjusted trial balance and an adjusted trial balance using the format in your book. Also , prepare a statement of owner's equity, an income statement, and a balance sheet as of 6/30/04.