Question

Just Rolling Along Inc. was organized on May 1, 2007, by two college students who recog nized an opportunity to make money while spending their days at a beach along Lake Michi- gan. 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 $9,000 from each of the two principal owners of the new business in exchange for shares of stock. May 1: Purchased 10 bicycles for $300 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 $15 monthly fee. May 9: Purchased 20 pairs of in-line skates at $125 per pair, 20 heimets at $50 each, and 20 sets of protective gear (knee and elbow pads and wrist guards) at $45 per set for cash. May 10: Purchased $100 in miscellaneous supplies on account. The company has 30 days to pay for the supplies. May 15: Paid S125 bill from local radio stauon for advertising for the last two weeks of May. May 17: Customers rented in-line skates and bicycles for cash of $1,800. May 24: Billed the local park district $1,200 for in-line skating lessons provided to neigh- borhood kids. 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% ofthe amount billed to the park district. May 30: Customers rented in-line skates and bicycles for cash of $3,000. May 30: Paid wages of $160 to a friend who helped out over the weekend. May 31: Paid the balance due on the bicycles.

Answer 1

	Assets				=	Laibilites	Equity
Date	Cash	Accounts receivable	Equpment	Supplies	=	Accounts payable	Capital stock	Retained earnings
05-Jan	$     18,000				=		$          18,000
05-Jan			$          3,000		=	$          3,000
Bal.	$     18,000		$          3,000		=	$          3,000	$          18,000
05-May	$           (15)				=			–15
Bal.	$     17,985		$          3,000		=	$          3,000	$          18,000	$              (15)
05-Sep	$     (4,400)		$          4,400		=
Bal.	$     13,585		$          7,400		=	$          3,000	$          18,000	$              (15)
05-Oct				$          100	=	$              100
Bal.	$     13,585		$          7,400	$          100	=	$          3,100	$          18,000	$              (15)
May-15	$        (125)				=			$           (125)
Bal.	$     13,460		$          7,400	$          100	=	$          3,100	$          18,000	$           (140)
May-17	$       1,800				=			$          1,800
Bal.	$     15,260		$          7,400	$          100	=	$          3,100	$          18,000	$          1,660
May-24		$    1,200			=			$          1,200
Bal.	$     15,260	$    1,200	$          7,400	$          100	=	$          3,100	$          18,000	$          2,860
May-29	$           600	$      (600)			=
Bal.	$     15,860	$        600	$          7,400	$          100	=	$          3,100	$          18,000	$          2,860
May-30	$       3,000				=			$          3,000
Bal.	$     18,860	$        600	$          7,400	$          100	=	$          3,100	$          18,000	$          5,860
May-30	$        (160)				=			$           (160)
Bal.	$     18,700	$        600	$          7,400	$          100	=	$          3,100	$          18,000	$          5,700
May-31	$     (3,000)				=	–3,000
Bal.	$     15,700	$        600	$          7,400	$          100	=	$              100	$          18,000	$          5,700

Ques 2

Just Rolling Along Inc.
Income Statement
Transactions for the month ending May 31, 2007
Revenues:
Rental Fees	$4,800
Lessons	1,200
Total revenues		$6,000
Expenses:
Registration Fee	15
Advertising	125
Salaries and Wages	160
Total expenses		300
Net income		5,700

Ques 3

Balance sheet
Current assets:
Cash	$15,700
Accounts receivable	600
Supplies	100
Total Current Assets		$16,400
Property, plant, and equipment:
Land		7,400
Total Assets		$23,800
Liabilities
Current Liabilities:
Accounts Payable	$100
Total liabilities		$100
Stockholders’ Equity
Capital stock	$18,000
Retained Earnings	5,700
Total stockholders’ equity		$23,700
Total liabilities and stockholders’ equity		$23,800