Question & Answer: During its first month of operation, the Bethany's Bicycle Corporation, which specializes in bicycle repairs, com…..

pleted the following transactions.

March Transactions
Date	Transaction DescriptionDuring its first month of operation, the Bethany’s Bicycle Corporation, which specializes in bicycle repairs, com
March 1	Began business by making a deposit in a company bank account of $20,000, in exchange for 2,000 shares of $10 par value common stock.
March 1	Paid the premium on a 1-year insurance policy, $2,400.
March 1	Paid the current month’s store rent expense, $1,900.
March 3	Purchased repair equipment from Andrew Company, $5,800. Paid $1,000 down and the balance was placed on account. Payments will be $400.00 per month for 12 months. The first payment is due 4/1. Note: Use Accounts Payable for the Balance Due.
March 8	Purchased repair supplies from Jackson Company on credit, $650.
March 10	Paid telephone bill for March, $340.
March 11	Cash bicycle repair revenue for the first third of March, $1,650.
March 18	Made payment to Jackson Company, $400.
March 20	Cash bicycle repair revenue for the second third of March, $2,450.
March 31	Cash bicycle repair revenue for the last third of March, $1,250.
March 31	Paid the current month’s electice bill, $250.
March 31	Declared and paid cash dividend of $1,000.

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Use the following account descriptions for journal entries.

Chart of Accounts
Account Type	Account Number	Account Title	Normal Balance
Assets
	111	Cash	Debit
	117	Prepaid Insurance	Debit
	119	Repair Supplies	Debit
	144	Repair Equipment	Debit
	145	Accum Dep -Repair Equipment	Credit

Liabilities
	212	Accounts Payable	Credit
	213	Income Tax Payable	Credit

Stockholders Equity
	311	Common Stock	Credit
	312	Retained Earnings	Credit
	313	Dividends	Debit

Revenue
	411	Bicycle Repair Revenue	Credit

Expenses
	511	Store Rent Expense	Debit
	512	Telephone Expense	Debit
	513	Insurance Expense	Debit
	514	Repair Supplies Expense	Debit
	515	Dep Expense – Repair Equipment	Debit
	516	Income Tax Expense	Debit
	517	Electric Expense	Debit

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REQUIREMENT #3: Prepare a trial balance for March in the space below.
Bethany’s Bicycle Corporation Trial Balance March 31
Account	Account	Balance
Number	Title	Debit	Credit

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Requirement #4: Prepare adjusting entries using the following information in the General Journal below. Show your calculations! a) One month’s insurance has expired. b) The remaining inventory of repair supplies is $200. c) The estimated depreciation on repair equipment is $120. d) The estimated income taxes are $65.
Requirement #5: Post the adjusting entries on March 31 below to the General Ledger T-accounts and compute adjusted balances. Just add to the balances that are already listed.
General Journal
Date	Account Number from Chart of Accounts tab	Account Title from Chart of Accounts tab	Debit	Credit

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Expert Answer

Journal entries in books of accounts of Bethany Bicycle Corporation are as follows :

Date Particulars Debit ( In $ ) Credit ( In $ )

March 1 Cash 20,000 To Common Stock [ 2,000 * 10 ] 20,000

March 1 Prepaid Insurance 2,400 To Cash 2,400

March 1 Store rent expense 1,900 To Cash 1,900

March 3 Repair Equipment 5,800 To Cash 1,000 To Accounts payable [ 400 * 12 ] 4,800

March 8 Repair Supplies 650 To Accounts Payable 650

March 10 Telephone Expenses 340 To Cash 340

March 11 Cash 1,650 To Bicycle repair revenue 1,650

March 18 Accounts payable 400 To Cash 400

March 20 Cash 2,450 To Bicycle repair revenue 2,450

March 31 Cash 1,250 To Bicycle repair revenue 1,250

March 31 Electric expense 250 To Cash 250

March 31 Retained Earnings 1,000 To Dividends 1,000

March 31 Dividends 1,000 To Cash 1,000

Bethany Bicycle Corporation

Trial Balance before adjusting entries

As on 31 March

Particulars Debit ( In $ ) Credit ( In $ )

Cash 18,060

Common Stock 20,000

Prepaid Insurance 2,400

Store rent expense 1,900

Repair Equipment 5,800

Accounts Payable 5,050

Repair Supplies 650

Telephone expenses 340

Bicycle repair revenue 5,350

Electric expense 250

Retained earnings 1,000

Total 30,400 30,400

Adjusting journal entries in books of accounts of Bethany Bicycle Corporation are as follows :

Particulars Debit ( In $ ) Credit ( In $ )

(a) Insurance expense 200 To Prepaid Insurance 200 [ [ 2,400 / 12 ] * 1 ]

(b) Repair Supplies expense 450 To Repair Supplies 450 [ 650 – 200 ]

(d) Income tax expense 65 To Income tax payable 65

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