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| 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 |
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| 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. |
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| 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 ]
(c) Depreciation expense ( Repair Equipment ) 120 To Accumulated Depreciation ( Repair Equipment ) 120
(d) Income tax expense 65 To Income tax payable 65
