Accounting Cycle Review 4-2 Lars Linken opened Grouper Cleaners on March 1, 2017

Question

Accounting Cycle Review 4-2 Lars Linken opened Grouper Cleaners on March 1, 2017. During March, the following transactions were completed. Mar. 1 Issued 8,600 shares of common stock for $12,900 cash. Borrowed $5,400 cash by signing a 6-month, 6%, $5,400 note payable. Interest will be paid the first day of each subsequent month. 1 Purchased used truck for $6,900 cash. 2 Paid $1,200 cash to cover rent from March 1 through May 31 3 Paid $2,100 cash on a 6-month insurance policy effectivearch 1. 6 Purchased cleaning supplies for $1,720 on account. 14 Billed customers $3,180 for cleaning services performed. 18 Paid $430 on amount owed on deaning supplies. 20 Paid $1,510 cash for employee salaries. 21 Collected $1,380 cash from customers billed on March 14 28 Billed customers $3,610 for cleaning services performed. 31 Paid $300 for gas and oil used in truck during month (use Maintenance and Repairs Expense 31 Declared and paid a $770 cash dividend. The chart of accounts for Grouper Cleaners contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Prepaid Rent, Equipment, Accumulated Depreciation-Equipment, Accounts Payable, salaries and wa?es Payable, Notes Payable, Interest Payable, Common stock Retained Earnings Dividends, Income Summary Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Rent Expense, and Interest Expense.

Explanation / Answer

Grouper Cleaners General Journal for the month of March , 2017 Date Account Title Debit Credit Mar.1 Cash 12900 Common Stock 12900 (Issue of 8,600 shares of common stock) Mar.1 Cash 5400 6% Note Payable 5400 (Borrowed cash on note payable) Mar.1 Delivery Truck 6900 Cash 6900 (Purchase of used truck) Mar.2 Prepaid Rent 1200 Cash 1200 (Rent paid fromMarch to May) Mar.3 Prepaid Insurance 2100 Cash 2100 (Payment of 6-month insurance) Mar.6 Cleeaning Supplies 1720 Accounts Payable 1720 (Purchase of cleaning supplies on account) Mar.14 Accounts Receivable 3180 Service Revenue 3180 (Services performed on account) Mar.18 Accounts Payable 430 Cash 430 (Payment made on account to creditor) Mar.20 Salaries Expense 1510 Cash 1510 (Cash paid for salaries) Mar.21 Cash 1380 Accounts Receivable 1380 (Collection from customers) Mar.28 Accounts Receivable 3610 Service Revenue 3610 (Services performed on account) Mar.31 Utility Expense 300 Cash 300 (Utility expense paid) Mar.31 Dividend 770 Cash 770 (Dividend paid) Cash Delivery Truck Date Debit Credit Date Date Debit Credit Date Mar.1 12900 6900 Mar.1 Mar.1 6900 Mar.1 5400 1200 Mar.2 Mar.21 1380 2100 Mar.3 6900 0 430 Mar.18 6900 1510 Mar.20 300 Mar.31 Note Payable 770 Mar.31 Date Debit Credit Date 19680 13210 5400 mar.1 6470 0 5400 Prepaid Rent 5400 Date Debit Credit Date Mar.2 1200 Prepaid Insurance Date Debit Credit Date 1200 0 Mar.3 2100 1200 2100 0 2100 Cleaning Suplies Date Debit Credit Date Accounts Receivable Mar.6 1720 Date Debit Credit Date 1720 0 Mar.14 3180 1380 Mar.21 1720 Mar.20 3610 6790 1380 Accounts Payable 5410 Date Debit Credit Date Service Revenue Mar.18 430 1720 Mar.6 Date Debit Credit Date 3180 Mar.14 430 1720 3610 Mar.28 1290 0 6790 Salaries Expense 6790 Date Debit Credit Date Common Stock Mar.20 1510 Date Debit Credit Date 12900 Mar.1 1510 0 0 12900 1510 12900 Dividend Utility expense Date Debit Credit Date Date Debit Credit Date Mar.31 770 Mar.31 300 770 0 300 0 770 300 Grouper Cleaners Unadjusted Trial Balance as at March 31, 2017 Account Debit Credit Cash 6470 Accounts Receivable 5410 Cleaning Supplies 1720 Prepaid Insurance 2100 Prepaid Rent 1200 Delivery Truck 6900 Accum. Depr. - Truck Accounts Payable 1290 Note Payable 5400 Common Stock 12900 Dividend 770 Service evenue 6790 Salaries Expense 1510 Utility Expense 300 Total 26380 26380 Grouper Cleaners Adjusting entries for the month of March , 2017 Ref Account Title Debit Credit 1 Accounts Receivable 170 Service Revenue 170 (Unbilled service revenue) 2 Depreciation expense 220 Accumulated Depr. - Truck 220 (Depreciation on used truck) 3 Insurance Expense 350 Prepaid Insurance 350 (Insurance expired) 4 Supplies Expense 1480 Cleaning Supplies 1480 (Cleaning supplies used) 5 Salaries Expense 930 Salaries Payable 930 (Accrued and unpaid salaries) 6 Rent Expense 400 Prepaid Rent 400 (Rent for the month recorded) 7 Interest Expense 27 Interest Payable 27 (Interest expense for march on note payable) Cash Delivery Truck Date Debit Credit Date Date Debit Credit Date Mar.1 12900 6900 Mar.1 Mar.1 6900 Mar.1 5400 1200 Mar.2 Mar.21 1380 2100 Mar.3 6900 0 430 Mar.18 6900 1510 Mar.20 300 Mar.31 Note Payable 770 Mar.31 Date Debit Credit Date 19680 13210 5400 mar.1 6470 0 5400 Prepaid Rent 5400 Date Debit Credit Date Prepaid Insurance Mar.2 1200 400 Adj.6 Date Debit Credit Date Mar.3 2100 350 Adj.3 1200 400 2100 350 800 1750 Cleaning Suplies Accounts Receivable Date Debit Credit Date Date Debit Credit Date Mar.6 1720 1480 Adj.4 Mar.14 3180 1380 Mar.21 1720 1480 Mar.20 3610 240 Adj.1 170 6960 1380 Accounts Payable 5580 Date Debit Credit Date Service Revenue Mar.18 430 1720 Mar.6 Date Debit Credit Date 3180 Mar.14 430 1720 3610 Mar.28 1290 170 Adj 1 Salaries Expense 0 6960 Date Debit Credit Date 6960 Mar.20 1510 Common Stock Adj.5 930 Date Debit Credit Date 12900 Mar.1 2440 0 0 12900 2440 12900 Dividend Utility expense Date Debit Credit Date Date Debit Credit Date Mar.31 770 Mar.31 300 770 0 300 0 770 300 Deprecpation Expense Accumulated Depr. - Truck Date Debit Credit Date Date Debit Credit Date Adj.2 220 220 Adj.2 220 0 0 220 220 220 Insurance Expense Deprecpation Expense Date Debit Credit Date Date Debit Credit Date Adj.3 350 Adj.4 1480 350 0 1480 0 350 1480 Salaries Payable Rent Expense Date Debit Credit Date Date Debit Credit Date 930 Adj.5 Adj.6 400 0 930 400 0 930 400 Interest Expense Interest Payable Date Debit Credit Date Date Debit Credit Date Adj.7 27 27 Adj.7 27 0 0 27 27 27 Grouper Cleaners Adjusted Trial Balance as at March 31, 2017 Account Debit Credit Cash 6470 Accounts Receivable 5580 Cleaning Supplies 240 Prepaid Insurance 1750 Prepaid Rent 800 Delivery Truck 6900 Accum. Depr. - Truck 220 Accounts Payable 1290 Note Payable 5400 Salaries Payable 930 Interest Payable 27 Common Stock 12900 Dividend 770 Service Revenue 6960 Salaries Expense 2440 Supplies Expense 1480 Rent Expense 400 Utility Expense 300 Insurance Expense 350 Interest Expense 27 Depreciation 220 Total 27727 27727 Grouper Cleaners Income Statament for the month of March , 2017 Service Revenue 6960 Expenses: Salaries Expense 2440 Supplies Expense 1480 Rent Expense 400 Utility Expense 300 Insurance Expense 350 Depreciation 220 Interest Expense 27 Total Expenses 5217 Net Income 1743 Grouper Cleaners Balance Sheet as at March 31, 2017 Assets Cash 6470 Accounts Receivable 5580 Cleaning Supplies 240 Prepaid Insurance 1750 Prepaid Rent 800 Current Assets 14840 Delivery Truck 6900 Accum. Depr. - Truck 220 6680 Total Assets 21520 Liabilities and stockholders' equity Accounts Payable 1290 Note Payable 5400 Salaries Payable 930 Interest Payable 27 Total Liabilities 7647 Common Stock 12900 Retained Earnings 973 Total stockholders' equity 13873 Total Liabilities and Stockholders' equity 21520

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