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SHA Café had the accompanying balance sheet accounts, July 312018. Assets Liab. & Stockholders’ Equity $ 22,000 37,000 131,000 4,000 $60,000 Accounts Payable Paid-in Capital Retained income Accounts Receivable Inventory Prepaid rent Store equipment Less: Accumulated Depreciation $111,000 40,000 79,000 24,000 Total Assets $230,000 TL + TE $230,000 SHA Cafe has the following transactions for the month of August2017. Record appropriate journal entry for each transaction and post the transactions to the T accounts. Prepare income statement and balance sheet for the month of August. Please show all your work. a. SHA Cafe owner invested $50000 cash for expansion. b. The caſe acquired necessary kitchen equipment for $8,000 cash and $1,500 on a 2 month note at 8%. Equipment has 5 year useful life with a total of 500 salvage value. c. The cafe paid $3,000 for six months’ rent in advance at the beginning of the month. d. The cafe borrowed $24,000 from bank on August 1. The note is for two years with all interest due at the end of note. The interest rate is 10%. e. The caſe purchased inventory costing $9,000, paying cash $3,000, and the remainder was on open account . The cafe generated revenues for $20,000. 60% of the sales was received in cash, and the 12,000 remainder was on account. g. The cost of the goods sold was $5,000. h. The cafe owed $2,500 for wages to be paid on September 2. i. One month of wage including owner’s salary other than transaction h, $5,000 was paid in cash . eighth Ten H expen d” interest expen
Expert Answer
| Transaction | Accounts Title | Dr | Cr |
| a | Cash | $50,000 | |
| Common stock | $50,000 | ||
| b | Store Equipment | $9,500 | |
| Cash | $8,000 | ||
| Short term Notes payable | $1,500 | ||
| c | Preapid Rent | $3,000 | |
| Cash | $3,000 | ||
| d | Cash | $24,000 | |
| Long term Notes payable | $24,000 | ||
| e | Inventory | $9,000 | |
| Cash | $3,000 | ||
| Accounts payable | $6,000 | ||
| f | Cash | $12,000 | |
| Accounts Receivable | 8000 | ||
| Sales | 20000 | ||
| g | Cost of Good sold | $5,000 | |
| Inventory | $5,000 | ||
| h | Wages expenses | $2,500 | |
| Wages Payable | $2,500 | ||
| i | Wages expenses | $5,000 | |
| Cash | $5,000 | ||
| Accounts Title | Dr | Cr | |
| Cash | 89000 | ||
| Accounts Receivable | 45000 | ||
| Inventory | 135000 | ||
| Prepaid Rent | 7000 | ||
| Store Equipment | 69500 | ||
| Accumulated Depreciation | 24000 | ||
| Accounts Payable | 117000 | ||
| Wages payable | $2,500 | ||
| Short term Notes payable | $1,500 | ||
| Long term Notes payable | $24,000 | ||
| Paid In capital | 90000 | ||
| Retained earnings | 79000 | ||
| Sales | 20000 | ||
| Cost of Good sold | 5000 | ||
| Wages expenses | 7500 | ||
| Total | 358000 | 358000 | |
| Income Summary | |||
| Sales | 20000 | ||
| Less | |||
| Cost of Good sold | 5000 | ||
| GrossProfit | 15000 | ||
| Wages expenses | 7500 | ||
| Net income | 7500 | ||
| Balance sheet | |||
| Assets | |||
| Current Assets | |||
| Cash | 89000 | ||
| Accounts Receivable | 45000 | ||
| Inventory | 135000 | ||
| Prepaid Rent | 7000 | ||
| Total Current Assets | 276000 | ||
| Store Equipment | 69500 | ||
| Less: Accumulated Depreciation | 24000 | 45500 | |
| Total Assets | 321500 | ||
| Liabilities & Stockholder Equity | |||
| Current Liabilities | |||
| Accounts Payable | 117000 | ||
| Wages payable | 2500 | ||
| Short term Notes payable | 1500 | ||
| Total Current Liabilities | 121000 | ||
| Long term Notes payable | $24,000 | ||
| Total Liabilities | $145,000 | ||
| Stockholder Equity | |||
| Paid In capital | 90000 | ||
| Retained earnings | 86500 | ||
| Total Stockholder Equity | 176500 | ||
| Total Liabilities & Stockholder Equity | $321,500 | ||
