Josh has started bike dealership. Mary is interested ininvesting in this dealers
ID: 2433560 • Letter: J
Question
Josh has started bike dealership. Mary is interested ininvesting in this dealership. Follwing is a list of transactions that occur on or aboutjanuary 1,2007: - Josh contributes $6000 cash in exchange of 1000 shares ofstock. Mary also contributes $12000 cash in exchange for 2000shares of stock. - Josh leases a building. Lease is for one year at $250 permonth. Rent is due on the first of each month. All rent for theyear has been paid in accordance with the lease terms. - Josh purchased six-month insurance policy to cover hisinventory. The total cost of the policy was $1500 and was paid infull at that time. On july 1,2008, Josh renewed his insurance policy for anentire year. Total cost of the new policy was $3200 and was alsopaid in full at the time the policy was renewed. A summary of inventory transactions for 2007 is as follows(allpurchases were made on account and all sales were made oncredit): Datepurchased Bike# Purchaseamount Datesold Saleamount Feb1 1 2500 Feb22 2800 Feb15 2 4200 March25 5600 Feb15 3 2300 June26 3500 May20 4 1800 --- ---- July18 5 2600 Oct19 3700 Oct18 6 2500 Oct25 4100 Dec10 7 3200 --- ----- Total 19100 19700 - Cash paid to bike dealers on account was $18400 - Cash received from customers on account was $13200 - Ending inventory showed 2 bikes left in inventory as of12/31/07 - Selling expenses were $700(all paid in cash) - Based on review of his accounts receivable aging report asof 12/31/07, Josh estimates that $200 of his outstanding accountsreceivable balance will be uncollectible - For the purpose of this problem, assume a 30% income taxrate Required Journalize above transactions in the general journal. Postthese transactions to T-accounts. Create a trial balance. Assumeinventory is kept on periodic system. You can use any of thecosting methods(FIFO, LIFO, WEIGHTED AVERAGE COST OR SPECIFICIDENTIFICATION). Then prepare four financial statements. Josh has started bike dealership. Mary is interested ininvesting in this dealership. Follwing is a list of transactions that occur on or aboutjanuary 1,2007: - Josh contributes $6000 cash in exchange of 1000 shares ofstock. Mary also contributes $12000 cash in exchange for 2000shares of stock. - Josh leases a building. Lease is for one year at $250 permonth. Rent is due on the first of each month. All rent for theyear has been paid in accordance with the lease terms. - Josh purchased six-month insurance policy to cover hisinventory. The total cost of the policy was $1500 and was paid infull at that time. On july 1,2008, Josh renewed his insurance policy for anentire year. Total cost of the new policy was $3200 and was alsopaid in full at the time the policy was renewed. A summary of inventory transactions for 2007 is as follows(allpurchases were made on account and all sales were made oncredit): Datepurchased Bike# Purchaseamount Datesold Saleamount Feb1 1 2500 Feb22 2800 Feb15 2 4200 March25 5600 Feb15 3 2300 June26 3500 May20 4 1800 --- ---- July18 5 2600 Oct19 3700 Oct18 6 2500 Oct25 4100 Dec10 7 3200 --- ----- Total 19100 19700 - Cash paid to bike dealers on account was $18400 - Cash received from customers on account was $13200 - Ending inventory showed 2 bikes left in inventory as of12/31/07 - Selling expenses were $700(all paid in cash) - Based on review of his accounts receivable aging report asof 12/31/07, Josh estimates that $200 of his outstanding accountsreceivable balance will be uncollectible - For the purpose of this problem, assume a 30% income taxrate Required Journalize above transactions in the general journal. Postthese transactions to T-accounts. Create a trial balance. Assumeinventory is kept on periodic system. You can use any of thecosting methods(FIFO, LIFO, WEIGHTED AVERAGE COST OR SPECIFICIDENTIFICATION). Then prepare four financial statements. Journalize above transactions in the general journal. Postthese transactions to T-accounts. Create a trial balance. Assumeinventory is kept on periodic system. You can use any of thecosting methods(FIFO, LIFO, WEIGHTED AVERAGE COST OR SPECIFICIDENTIFICATION). Then prepare four financial statements.Explanation / Answer
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