Question

Transaction Analysis and Financial Statements

Transaction Analysis and Financial Statements Just Rolling Along Inc. was organized on May 1 by two college students who recognized an opportunity to make money while spending their days at a beach along Lake Michigan. The two entrepreneurs plan to rent bicycles and in-line skates to weekend visitors to the lakefront. The following transactions occurred during the first month of operations: May 1: Received contribution of $9,500 from each of the two principal owners of the new business in exchange for shares of stock. May 1: Purchased ten bicydes for $275 each on an open account. The company has 30 days to pay for the bicycles. May 5: Registered as a vendor with the city and paid the $20 monthly fee. May 9: Purchased 15 pairs of in-line skates at $140 per pair, 15 helmets at $35 each, and 15 sets of protective gear (knee and elbow pads and wrist guards) at $30 per set for cash. May 10: Purchased $105 in miscellaneous supplies on account. The company has 30 days to pay for the supplies. May 15: Paid $125 bill from local radio station for advertising for the last two weeks of May. May 17: Customers rented in-line skates and bicycles for cash of $2,140. May 24: Billed the local park district $1,400 for in-line skating lessons provided to neighborhood children. The park district is to pay one-half of the bill within five working days and the rest within 30 days. May 29: Received 50% of the amount billed to the park district. May 30: Customers rented in-line skates and bicycles for cash of $2,750. May 30: Paid wages of $150 to a friend who helped over the weekend. May 31: Paid the balance due on the bicycles. Required:

Answer 1

			ASSETS				=	LIABILITIES	+	STOCKHOLDERS' EQUITY
		Date	Cash	Accounts Receivable	Equipment	Supplies		Accounts Payable		Capital Stock	Retained Earnings	Revenue	-	Expense	=	Income
		May,1	$19,000							$19,000
		May,1			$2,750			$2,750
		Balance	$19,000	$0	$2,750	$0	$0	$2,750	$0	$19,000	$0
		May,5	($20)								($20)			$20		($20)
		Balance	$18,980	$0	$2,750	$0	$0	$2,750	$0	$19,000	($20)	$0		$20	$0	($20)
	(15*$140+15*$35+15*$30)	May,9	-$3,075			$3,075
		Balance	$15,905	$0	$2,750	$3,075	$0	$2,750	$0	$19,000	($20)	$0		$20	$0	($20)
		May,10				$105		$105
		Balance	$15,905	$0	$2,750	$3,180	$0	$2,855	$0	$19,000	($20)	$0		$20	$0	($20)
		May,15	($125)								($125)			$125		($125)
		Balance	$15,780	$0	$2,750	$3,180	$0	$2,855	$0	$19,000	($145)	$0		$145	$0	($145)
		May,17	$2,140								$2,140	$2,140				$2,140
		Balance	$17,920	$0	$2,750	$3,180	$0	$2,855	$0	$19,000	$1,995	$2,140		$145	$0	$1,995
		May,24		$1,400							$1,400	$1,400				$1,400
		Balance	$17,920	$1,400	$2,750	$3,180	$0	$2,855	$0	$19,000	$3,395	$3,540		$145	$0	$3,395
	(50%*1400)	May,29	$700	($700)
		Balance	$18,620	$700	$2,750	$3,180	$0	$2,855	$0	$19,000	$3,395	$3,540		$145	$0	$3,395
		May,30	$2,750								$2,750	$2,750				$2,750
		Balance	$21,370	$700	$2,750	$3,180	$0	$2,855	$0	$19,000	$6,145	$6,290		$145	$0	$6,145
		May,30	($150)								($150)			$150		($150)
		Balance	$21,220	$700	$2,750	$3,180	$0	$2,855	$0	$19,000	$5,995	$6,290	$0	$295	$0	$5,995
		May,31	($2,750)					($2,750)			$0
		Balance	$18,470	$700	$2,750	$3,180	$0	$105	$0	$19,000	$5,995	$6,290	$0	$295	$0	$5,995
																	$6,290 $295 $5,995 INCOME STATEMENT Rental Revenue $4,890 Skating Lession Revenue $1,400 Total Revenue Expenses: Registration fees $20 Advertising expenses $125 Salaries and wages expense $150 Total Expenses Income BALANCE SHEET Assets: Current Assets Cash $18,470 Accounts Receivable $700 Supplies $3,180 Total Current Assets $22,350 Property and Equipment $2,750 Total Assets $25,100 LIABILITIES and EQUITY Current Liabilities Accounts Payable $105 Stock Holders Equity: Capital Stock $19,000 Retained Earnings $5,995 Total Shareholders equities $24,995 Total Liabilities and Equities $25,100