Question

The trial balance of My Motor, Inc. on March 1, 20XX, lists the entity’s assets, liabilities, and owner’s equity on that date.

	Balance
Account Title	Debit	Credit
Cash	26,000
Accounts receivable	4,500
Accounts payable		2,000
Common Stock		20,500
Retained earnings		8,000
Total	30,500	30,500

During March, the business engaged in the following transactions:

a. Borrowed $45,000 from the bank and signed a note payable in the name of the business.

b. Paid cash of $40,000 to acquire land.

c. Performed service for a customer and received cash of $5,000.

d. Purchased supplies on account, $300.

e. Performed customer service and earned revenue on account, $2,600.

f. Paid $1,200 on account.

g. Paid the following cash expenses: salaries, $3,000; rent, $1,500; and interest, $400.

h. Received $3,100 on account.

i. Received a $200 utility bill that will be paid next week.

j. Paid cash dividends of $1,800. Required:

1.) Prepare journal entries for each transaction. Enter journal entries by the transaction letter.

2.) Prepare the trial balance of My Motors, Inc. at March 31, 20XX.

3.) Prepare financial statements for My Motors, Inc. for the period ending March 31, 20XX. (Income Statement and Balance sheet)

Answer 1

No. Date Credit ($) Journal Account Titles and Explanation Cash Note payable (To record the issuance of note payable) Debit ($) 45,000 45,000 40,000 Land Cash (To record the purchase of land) 40,000 5,000 Cash Service revenue (To record the service rendered for cash) 5,000 300 Supplies Accounts payable (To record the supplies purchase on credit) 300 2,600 Accounts receivable Service revenue (To record the service rendered on credit) 2,600 1,200 Accounts payable Cash (To record the payment made to creditors) 1,200 g Salaries expense Rent expense Interest expense Cash (To record the expense paid) 3,000 1,500 400 4,900 3,100 Cash Accounts receivable (To record the collection from debtors) 3,100 200 Utility expense Utility payable (To record the uitility expense) 200 1,800 Dividends Cash (To record the cash dividend paid) 1,800

CR Beginning Bal. Note payable Service revenue Accounts receivable Cash 26,000 Land 45,000 Accounts payable 5,000 Salaries expense 40,000 1,200 3,000 3,100 Rent expense Interest expense Dividends 1,500 400 1,800 Ending Bal. 31,200 79,100 $ 79,100 $

My Motors, Inc Trial Balance as on March 31,20XX Account Title Debits Credits 1,100 4,000 31,200 20,500 40,000 1,500 3,000 Accounts payable (2000+300-1200) Accounts receivable (4500+2600-3100) Cash Common stock Land Rent expense Salaries expense Service revenue (5000+2600) Utility expense Retained earnings Note payable Supplies Utility payable Interest expense Dividends 7,600 200 8,000 45,000 300 200 400 1,800 82,400 $ 82,400

7,600 My Motors, Inc Income Statement For the Year Ended March 31, 20XX Service revenue Less: Operating expenses: Rent expense 1,500 Salaries expense 3,000 Utility expense 200 Interest expense 400 Total Operating Expenses Net income 5,100 2,500 My Motors, Inc Balance Sheet For the Year Ended March 31, 20XX Assets Current assets: Cash 31,200 Inventory Accounts receivable 4,000 Supplies 300 Total current assets 35,500 Fixed assets: Land 40,000 Total fixed assets 40,000 Total assets 75,500 Liabilities and Shareholders' Equity Current liabilities: Accounts payable 1,100 Utility payable 200 Total current liabilities 1,300 Non-current liabilities: Notes payable 45,000 Total non-current liabilities 45,000 Shareholders' equity Common stock 20,500 Retained earnings 8,700 Total Shareholders' equity 29,200 Total liabilities and shareholders' Equity $ 75,500 Activate VITTOUWS My Motors, Inc Statement of Shareholders' Equity For the Year Ended March 31, 20XX Retained Earnings 8,000 2,500 Beginning Balance Add: Net income Less: Dividend Ending Balance 1,800 8,700 $ - $ Amount Calculation for Cost of Goods Sold: Reginning inventory