Just Rolling Along Inc. was organized on May 1, 2012, by two college students wh
ID: 2701335 • Letter: J
Question
Just Rolling Along Inc. was organized on May 1, 2012, by two college students who recognized
an opportunity to make money while spending their days at a beach along Lake Michigan. The
two entrepreneurs plan to rent bicycles and in-line skates to weekend visitors to the lakefront.
The following transactions occurred during the first month of operations:
May 1: Received contribution of $9,000 from each of the two principal owners of the new
business in exchange for shares of stock.
May 1: Purchased ten bicycles for $300 each on an open account. The company has 30 days
to pay for the bicycles.
May 5: Registered as a vendor with the city and paid the $15 monthly fee.
May 9: Purchased 20 pairs of in-line skates at $125 per pair, 20 helmets at $50 each, and 20
sets of protective gear (knee and elbow pads and wrist guards) at $45 per set for cash.
May 10: Purchased $100 in miscellaneous supplies on account. The company has 30 days to
pay for the supplies.
May 15: Paid $125 bill from local radio station for advertising for the last two weeks of May.
May 17: Customers rented in-line skates and bicycles for cash of $1,800.
May 24: Billed the local park district $1,200 for in-line skating lessons provided to
neighborhood children. The park district is to pay one-half of the bill within five
working days and the rest within 30 days.
May 29: Received 50% of the amount billed to the park district.
May 30: Customers rented in-line skates and bicycles for cash of $3,000.
May 30: Paid wages of $160 to a friend who helped over the weekend.
May 31: Paid the balance due on the bicycles.
Required
2. Prepare an income statement for the month ended May 31, 2012.
3. Prepare a classified balance sheet at May 31, 2012.
Explanation / Answer
ASSETS = LIABILITIES + STOCKHOLDER'S EQUITY (+) (-) Date Cash A/R Supplies Equipment Building Land A/P Notes Capital Retained Revenues Expenses Payable Stock Earnings 1-May $ 18,000 $ 18,000 1-May $ 3,000 $ 3,000 5-May $ (15) $ (15) 9-May $ (4,400) $ 4,400 10-May $ 100 $ 100 15-May $ (125) $ (125) 17-May $ 1,800 $ 1,800 24-May $ 1,200 $ 1,200 29-May $ 600 $ (600) 30-May $ 3,000 $ 3,000 30-May $ (160) $ (160) 31-May $ (3,000) $ (3,000) $ 15,700 $ 600 $ 100 $ 7,400 $ - $ - $ 100 $ - $ 18,000 $ - $ 6,000 $ (300) Total Assets = $ 23,800 Total liabilities & Stockholder's Equity = $ 23,800
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