Question

Jim’s Shoes is a sole owner and has paid in capital and borrowed money to start his business. He has cash, inventory and a car, as well as, office supplies, shelves and a sign. He owes is shoe supplier some money for his inventory and has a bank loan. Each month he sells a few shoes on credit and has to pay his one employee, as well as, rent, the electric bill and water bill.

During his first month of operations, Jim invests $400 in his company in cash, Jim borrows $500 from his mom, Jim buys 6 pairs $300 worth of shoes on credit from his supplier, Jim pays $200 for rent, Jim buys a car on bank credit for $1,000, Customer Bob buys 1 pair of shoes for $100, Jim buys a sign for $50, and 10 Shelves $10 each, Jim pays the water bill $25 and electric $35, Jim hired Don and paid him $50 to sell his shoes, Jim prepaid $60 for insurance, the annual premium on credit.

REQUIREMENTS:

From the list of transactions, journal entries, and chart of accounts form a balance sheet and income statement to include equity, retained earnings and net income.

Answer 1

ANSWER

The books of Jim's Shoes:

Transaction / Event	General Journal	Debit	Credit
		$	$
1.	Cash	400
	Jim, Capital		400
2.	Cash	500
	Note Payable		500
3.	Inventory	300
	Accounts Payable		300
4.	Rent Expense	200
	Cash		200
5.	Automobile	1,000
	Bank Loan Payable		1,000
6.	Cash	100
	Sales		100
7.	Furniture and Fixtures	150
	Cash		150
8.	Utilities Expense	60
	Cash		60
9.	Salaries Expense	50
	Cash		50
10.	Prepaid Insurance	60
	Cash		60