Prepare the journal entries necessary to record the activity listed below, and then prepare a balance sheet and income statement to reflect the activity for the month of March. There was no prior activity.
1. The firm borrowed $25,000 for working capital purposes; a short-term note was signed.
2. Owners invested $100,000 cash into the company.
3. A building was purchased for $250,000 with $50,000 cash and $200,000 long term mortgage loan.
4. Equipment (fixed assets) was purchased for $15,000 cash.
5. Inventory of $18,500 was purchased on account.
6. Bulk paper supplies- prepaid supplies- (copy paper, letterhead, envelopes, etc.) were purchased for $2,500 with cash.
7. Inventory that cost $7,000 was sold to customers for $15,000 cash.
8. Inventory of $9,300 was purchased; cash of $5,000 was paid and the balance is due in 30 days.
9. It was determined that $600 of the supplies previously purchased was used in the normal course of business for the month of March.
10. Inventory that cost $9,000 was sold to a customer for $16,000 on account
11. Cash of $8,000 was received from customers that had previously purchased items on credit.
12. Interest Expense of $1,000 needs to be accrued on March 31st.
13. Employee wages of $7,000 were not paid and must be accrued for March.
14. Utilities expense of $900 for the month of March was due at the end of the month, but has not been paid, so it needs to be accrued.
15. Insurance for the month of March amounting to $400 was paid on March 30th.
16. Depreciation of $800 needs to be recorded at the end of the month. (Consider this the total depreciation, no need to delineate between the building and equipment.)
17. Advertising expenses of $1,100 were incurred, though not paid in March.
18. Internet/telephone expenses of $600 were incurred, though not paid in March.
- Prepare a balance sheet as discussed in class for the month ended March 31 (there are no prior balances in any of the accounts).
- Prepare an income statement as discussed in class for the month of March (there are no prior balances in any of the accounts). Do not be concerned with income taxes for the March statements.