Question

Jessica Pothier opened FunFlatables on June 1. The company rents out moon walks and inflatable slides for parties and corporate events. The company also has obtained the use of an abandoned ice rink located in a local shopping mall, where its rental products are displayed and available for casual hourly rental by mall patrons. The following transactions occurred during the first month of operations. a. Jessica contributed $44,000 cash to the company on June 1 in exchange for its common stock. b. Purchased inflatable rides and inflation equipment on June 2, paying $29,700 cash. c. Received $8,750 cash from casual hourly rentals at the mall on June 3. d. Rented rides and equipment to customers for $13.250. Received cash of $3,900 on June 4 and the rest is due from customers. e. Received $3,950 from a large corporate customer on June 5 as a deposit on a party booking for July 4. f Began to prepare for the July 4 party by purchasing and receiving various party supplies on June 6 on account for $1,530 g. On June 7, paid $9,750 in cash for renting the mall space this month h On June 8, prepaid next month's mall space rental charge of $9,750 l. Received $2,150 on June 9 from customers on accounts recelvable ints eBook Print Paid $1,200 for running a television ad on June 10 k. Paid $4,600 in wages to employees on June 30 for work done during the month. or wo ne uing the month. References Required: 1. Prepare the journal entry for each of the above transactions. 2. Post the transaction activity from requirement 1 to the T-Accounts below. All accounts begin with zero balances because this is the first month of operations 3. Prepare an unadjusted trial balance for the end of June 4-a. Refer to the revenues and expenses shown on the unadjusted trial belance to calculate preliminary net income and net profit margin 4-b. Determine whether the net profit margin is better or worse than the 300 percent earned by a close competitor Complete this question by entering your answers in the tabs below Req 1 Req 2 Rea 3Req 44Reg 48 Prepare the journal entry for each of the above transactions. (tf no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.)

Answer 1

Solution:

Req 1

Journal entries
			(in USD)
Date	Particulars	Dr.	Cr
01-Jun	Cash	44000
	Common Stock		44000
	(Being cash received against issue of shares)
02-Jun	Inflation equipment	29700
	Cash		29700
	(being equipment purchased)
03-Jun	Cash	8750
	Rental income		8750
	(Being cash received against rental income)
04-Jun	Cash	3900
	Accounts receivable	9350
	Rental income		13250
	(Being rental income booked)
05-Jun	Cash	3950
	Deposit		3950
	( Being deposit received against party hall)
06-Jun	Prepaid Supplies	1530
	Accounts payable		1530
	(Being supplies purchased on account)
07-Jun	Rent expense	9750
	Cash		9750
08-Jun	Prepaid rent	9750
	Cash		9750
09-Jun	Cash	2150
	Accounts receivable		2150
	(Being cash collected against outstandings)
10-Jun	Advertisement	1200
	Cash		1200
	(Being cash paid for television ad)
30-Jun	Wages	4600
	Cash		4600
	(Being wages paid for june)
Req 3 Trial balance
Particulars	Dr	Cr
Cash	7750
Common Stock		44000
Inflation equipment	29700
Rental income		22000
Deposit		3950
Prepaid supplies	1530
Accounts receivable	7200
Wages	4600
Accounts payable		1530
Rent expense	9750
Prepaid rent	9750
Advertisement	1200
Total	71480	71480
Req 4 A & 4 B
	Income statement Balance Sheet Particulars USD Assets USD Liabilities USD Rental income 22000 Inflation equipment 29700 Accounts payable 1530 Less: expenses Cash 7750 Deposit 3950 Rental expense 9750 Prepaid rent 9750 Common stock 44000 Wages 4600 Accounts receivable 7200 Retained earnings 6450 Advertisement 1200 Prepaid supplies 1530 Net income 6450 55930 55930 Net profit margin 29%